July 26, 2019
Mortgage rates edged just slightly higher today for the average lender, marking the 2nd day of weakness this week. In terms of the underlying bond market, however, today was purely an extension of yesterday's trading patterns that began shortly after rates rose in response to the press conference with European Central Bank (ECB) President Mario Draghi.
When we talk about "rates" rising in response to Draghi, it can mean one of two things. As far as the average mortgage borrower is concerned, it can refer to the generally higher mortgage rates yesterday. But "rates" can also refer to the yields on various bonds that trade throughout the day. Whereas mortgage rates might only be adjusted a few times per day at the most (and typically not at all), bonds are moving hundreds to thousands of times a day, depending on the bond.
All this to say that the bond market--the actual foundation of mortgage rate movement--has been flat since yesterday mid-morning. Any changes in mortgage rates are purely incidental as lenders get caught up with yesterday's moves or hedge their bets heading into the weekend.
When they return, they'll face even more potential volatility than the ECB delivered yesterday. There are several big-ticket economic reports throughout the week, each with the power to push rates higher or lower. The policy announcement from the Federal Reserve is equally potent. If the events all happen to argue the same move for rates, it could be a big one, for better or worse.
Loan Originator Perspective
My clients continue to favor locking when within 30 days of closing. Economic data continues to show a fairly robust economy, but inflation is below what the Fed would like. I feel the FOMC announcement next week is not gonna be favorable at least in the short term to justify the risk of floating. -Victor Burek, Churchill Mortgage
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.