July 25, 2019
Mortgage rates were moderately higher today marking the first detectable shift of the week. Many of the market participants who trade the bonds responsible for rate movement had been waiting to see what the European Central Bank (ECB) had to say in its policy announcement today. Although the announcement itself was rate-friendly, traders felt that ECB President Mario Draghi wasn't rate-friendly enough in the subsequent press conference.
Bonds quickly began losing ground as Draghi spoke early this morning. The weaker levels (which imply higher rates) were already in place by the time most mortgage lenders generate their first rate sheet of the day. As such, most lenders were quoting higher rates right out of the gate.
The good news is that "higher rates" may not mean the same thing to you as it does to me. Because I write about rate movements EVERY DAY, I'm forced to follow even the changes that don't matter to most prospective mortgage borrowers. Today's increase is somewhere between insignificant and annoying depending on the lender. Some of you may not even see an increase in the "note rate," but rather, just the upfront/closing costs associated with that rate.
Volatility remains a risk heading into next week's Fed announcement on Wednesday. That said, Wednesday itself represents a far bigger risk, for better or worse depending on what the Fed has to say.
Loan Originator Perspective
Another Roller Coaster Day in Bonds. I am still suggesting locking at Application to avoid volatility and or disappointment. -Al Hensling
Today's Most Prevalent Rates
- 30YR FIXED - 3.875%
- FHA/VA - 3.625%
- 15 YEAR FIXED - 3.5-3.625%
- 5 YEAR ARMS - 3.375-3.75% depending on the lender
Ongoing Lock/Float Considerations
- Early 2019 saw a rapid reevaluation of big-picture trends in rates and in markets in general
- The Federal Reserve has been a key player, and while they aren't the ones pulling the global economic strings, their response (and even their EXPECTED response) to the economy has helped rates fall more quickly than they otherwise might.
- Based on the Fed's laundry list of concerns, the bond market (which determines rates) will be watching economic data closely, both at home and abroad, as well as trade-related concerns. The stronger the data and trade relations, the more rates could rise, while weaker data and trade wars will lead to new long-term lows.
- Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.