August 28, 2019
Mortgage rates moved lower today as MBS (the mortgage-backed securities that determine the value of mortgages on the secondary market) improved relative to US Treasuries. That's NOT a common occurrence recently! When Treasury yields have moved quickly to long-term highs or lows, MBS tend to lag the move noticeably. As 10yr yields moved even lower at the start of this week, it would be an understatement to say MBS were underperforming.
These things happen, however, and the current iteration fits well with precedent. Previous experience suggests TIME and MARKET STABILITY will help the mortgage market close the gap. As of this afternoon, Treasuries haven't made a new low yield for the 2nd straight day. They've also held inside a narrower range on each of the past 2 days (stability!). MBS took the opportunity to trade just a bit more optimistically than their Treasury benchmarks. This isn't a big deal or the source of a major change in rate momentum--just evidence that mortgage rates could eventually move a bit lower if current trading levels in Treasuries can be sustained.
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.