August 2, 2019
Mortgage rates fell again on Friday as lenders finally saw recent bond market gains stabilize enough to act on. In other words, lenders don't always keep their mortgage rate offerings moving in lock-step with the underlying bond market (which dictates rates over time). This helps protect them from potential volatility, which ultimately allows them to keep rates lower than they otherwise would be (volatility is costly in the mortgage rate world).
Yesterday's bond market movement was big and unexpected. It took 10yr Treasury yields to the lowest levels since November 2016. Mortgage rates weren't able to say the same until today. Interestingly enough, the bonds that specifically underlie mortgages failed to make any major improvement today (which is an entire piece of analysis unto itself). That means today's improvements were driven almost entirely by lenders simply catching up with yesterday's moves.
Also interesting was the fact that bonds/rates didn't pay much attention to this morning's big jobs report. This is traditionally the most important economic report of any given month, but it was overshadowed this week by Trump tweets, a significantly weaker manufacturing report, and the fact that it came in right in line with forecasts. The jobs data has more of a chance to cause a stir if it is much stronger or weaker than expected.
Loan Originator Perspective
Bonds hovered near unchanged this afternoon, after a tepid July jobs report. Frankly, it's encouraging just to retain (for now) yesterday's robust gains, but further progress may be tough, considering how fast rates dropped this week. I'm locking August closing, and looking hard at September loans too. Pigs get fat, but hogs get slaughtered, and no borrower wants to get slaughtered. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.75%
- FHA/VA - 3.25%
- 15 YEAR FIXED - 3.375%
- 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.