August 1, 2019
Mortgage rates fell today, but by how much depends on the lender! This runs contrary to the average news story which contains some reference to rates being flat week-over-week (due to Freddie Mac's weekly rate survey data, which unfortunately doesn't account for big market movement on Thursdays and Fridays). There was a better case to be made for such things yesterday as the Fed drew a mixed reaction from the bonds that underlie mortgages. If you didn't catch it, yesterday's article is highly recommended for those who want to understand why the Fed rate cut had no effect on mortgage rates. HERE IT IS.
One of the takeaways in that article is that rates would be dependent on economic data and developments, and that there were a few big-ticket items left this week. One of those was today's ISM Manufacturing report which was weaker than expected. Weaker data typically helps mortgage rates move lower. But that didn't account for the biggest move of the day. Just before 1:30pm, Trump tweeted about new tariffs on China. This caused a rapid movement out of stocks and into bonds. Excess demand for bonds equates to lower rates.
Mortgage lenders need some time to digest underlying market movement before adjusting their rate sheet offerings. Most lenders were able to do this today, and the results were excellent. Among lenders who updated their rates, the average 30yr fixed rate quote fell to its best levels in nearly a month. Any lender who didn't improve rates will likely be able to do so tomorrow, unless the jobs report (which comes out at 8:30am) is unbelievably stellar (strong economic data puts upward pressure on rates all other things being equal).
Loan Originator Perspective
Bonds posted an impressive, "face melting" rally today as Trump announced new China tariffs. As prospects for a looming trade deal wane, so do those for economic growth. Floating borrowers should at least LOOK at their pricing late today (after secondary desks have time to reprice better), but if your lender hasn't dramatically improved pricing, it's probably worth floating into tomorrow's NFP report. It's common for huge market gains to take a few days before they're reflected on rates, let's hope today's news trumps (pun intended) any NFP news tomorrow. -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.