July 29, 2019
Mortgage rates moved back down, albeit just slightly, into last week's range. They'd risen for 2 straight days by Friday, and today's improvement leaves them closer to Wednesday's levels. That assessment requires a bit of clarification, however.
Rate movement can refer to changes in the actual interest rate that determines the monthly payment amount of a mortgage. But there are other upfront fees and credits that affect the overall cost of financing. For example, if you are being quoted a lower rate than anyone else, but have to pay thousands of dollars to get that rate, you might not be saving any money over time.
Changes in those upfront costs happen far more readily than changes in the actual interest rates (technically referred to as "note rates"). Today was definitely not big enough to affect note rates for almost any scenario and only barely big enough to bring upfront costs a bit lower.
Bigger changes will require bigger swings in the underlying bond market. The potential for such changes increases exponentially throughout the week as a slew of important data and events hit the wires. Headliners include Wednesday's Fed rate decision and Friday's big jobs report.
Loan Originator Perspective
Bonds posted marginal gains today, as markets warily await this week's employment/inflation data, and Federal Reserve statement. The main fireworks start Wednesday, and continue through Friday. With a Fed rate cut already priced into current rates, the focus will be on their economic outlook and Chairman Powell's press conference. I'm all locked up for August closings, will be discussing pros/cons of locking September deals with my clients between now and Wednesday. -Ted Rood, Senior Originator
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.