July 8, 2019
Mortgage rates began the day in slightly lower territory compared to last Friday afternoon, but they'd risen noticeably from Wednesday to Friday. The recovery seen this morning wasn't enough to get them back in line with Wednesday's levels. To make matters slightly worse, by the afternoon, rates started to move up yet again.
There are a few important caveats to all of this. First off, very few lenders are far enough away from Wednesday's levels as to be quoting different "note rates." Note rates tend to be offered in 0.125% increments. It takes quite a bit of drama in the bond market (which dictates rates, ultimately) to justify a 0.125% move in the space of a few days. While Friday was indeed the worst day in months for the bond market, it happened to follow the best day in years.
For the average borrower, the net effect is a moderate hike in upfront costs in exchange for keeping the same rate quoted on Wednesday. This could range from 0.1 - 0.3% of the loan amount ($100-$300 for each $100k financed).
Don't take anything for granted going forward, however. There are several important events coming up this week. Specifically, Fed Chair Powell speaks every morning for the next 3 days. If he is a bit less dovish (i.e. rate-friendly) than markets currently anticipate, rates could remain under pressure to move higher.
Loan Originator Perspective
Bonds sleepwalked through most of Monday, with small AM gains evaporating by closing. The real fun starts tomorrow, as Fed Chair Powell speaks before his congressional testimony Wednesday and Thursday. Markets expect a dovish (rate cut friendly) tone, we'll see if they get it. Throw in a treasury auction and inflation data, and it shouldn't be boring. I'm locking loans closing within 30 days, looking hard at those closing 45 days out. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.875%
- FHA/VA - 3.5%
- 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.