January 28, 2020
Mortgage rates were steady to slightly higher today, leaving the average lender just a hair above the lowest rates in months, and still very close to the lowest rates in more than 3 years. The coronavirus outbreak is still a relevant consideration for financial markets, including interest rates, but traders took today to consolidate their recent positions.
In other words, the recently prevailing trends experienced a bit of a correction. Stocks rose moderately after falling sharply over the past 2 days. Treasury yields did the same. Mortgage rates moved a bit higher in some cases, but because they're not directly tied to Treasuries, they fared better by comparison. The trade-off was that mortgage rates didn't fall as much as Treasury yields over the past 2 business days.
If the virus situation continues to get worse before it gets better, rates could certainly go even lower. That's impressive considering the average lender is very close to their lowest rate offerings since the middle of 2016. But as soon as the fear begins to be replaced by optimism (i.e. containment of the virus becomes a probability), interest rates may snap back quickly to moderately higher levels.
Loan Originator Perspective
My pricing regressed slightly from Monday's, as durable goods and consumer confidence data largely met projections. With Wuhan Virus concerns largely priced into rates, and pricing near multi-year lows, seems like a good time to lock loans closing within 45 days, at least for risk averse borrowers. - Ted Rood, Senior Originator
Today's Most Prevalent Rates For Top Tier Scenarios
- 30YR FIXED - 3.5 -3.625%
- FHA/VA - 3.25 - 3.75%
- 15 YEAR FIXED - 3.25 - 3.375%
- 5 YEAR ARMS - 3.25-3.75% depending on the lender
Ongoing Lock/Float Considerations
- 2019 was 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. Major updates on either front could cause a volatile reaction in rates.
- 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.
- In addition to the economic data and the trade war, other factors can certainly emerge and cause rate volatility for better or worse (Wuhan Virus, for example)
- 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.