August 26, 2019
Mortgage rates are sort of all over the place at the moment, and almost never where you'd expect. Those who haven't been following the bond market too closely generally expect higher rates than what we've been seeing recently. Those who are well-versed in the longstanding relationship between mortgages and Treasury yields generally expect rates to have fallen MUCH faster than they actually have.
Even on shorter time horizons, the mortgage market is a tale of misdirection. For example, 10yr Treasury yields are basically unchanged today, but mortgage rates are either higher or lower depending on the lender. Some lenders responded to market conditions on Friday and bumped rates slightly lower. Among those lenders, some are in roughly similar shape today, but several responded to today's market conditions (which were the opposite of Friday's, and bumped rates slightly higher. Then there are the lenders who didn't make a move on Friday. Most of them are slightly better today, but face hurdles tomorrow to account for today's volatility.
Confused yet? It would be strange if you weren't. The point is this: mortgage-backed-securities (MBS) are the raw ingredient lenders use to determine rates. MBS have been flighty and generally much weaker than Treasuries. Lender pricing strategies have also been less friendly than normal due to volatility and the quick surge toward lower rates. The result is less consistent movement and less ability for rates to follow Treasury yields lower.
All of the above having been said, the average lender is still very close to the lowest levels in 3 years.
Loan Originator Perspective
Bond markets regressed in afternoon trading today, closing at the day's lows. While Tariff Trauma is still our primary concern, rates dropped so far, so fast, that some regression is almost inevitable. I'm locking September closings, floating most files closing in October and beyond. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.5 - 3.625%
- FHA/VA - 3.25-3.5%
- 15 YEAR FIXED - 3.125 - 3.375%
- 5 YEAR ARMS - 3.375-3.75% depending on the lender
Ongoing Lock/Float Considerations
- 2019 has been the best year for mortgage rates since 2011. Big, long-lasting improvements such as this one are increasingly susceptible to bounces/corrections.
- Fed policy and the US/China trade war have been key players
- The Fed and the bond market (which dictates rates) will be watching economic data closely, both at home and abroad, as well as trade war updates. 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.