January 29, 2020
Mortgage rates regained their footing today, moving back to long-term lows after pausing to move slightly higher yesterday. The definition of "long-term" depends on the lender in question. Most lenders were offering just slightly better terms in September 2019, but only for a few days. For several other lenders, you'd have to go back to September 2016 to see anything lower. Either way, we're talking about the best rates in a long time and a range that's better defined as "mid 3's" than the previously applicable "sub 4%."
Today's improvement coincided with a policy announcement and press conference from the Fed. These events are widely regarded as capable of motivating big changes in rates, but that's not exactly what's going on here. In the current case, it's just as accurate to say that rates have been falling for other reasons and had merely circled the wagons to take a break from that movement as they waited to see what the Fed had to say. When the Fed's message did no harm to the bond market, rates were free to go about their business (of moving back toward long-term lows).
The persistent availability of such low rates depends on a few factors. The biggest among those at the moment is the evolution of the coronavirus outbreak. It's definitely been responsible for the quick bump toward this week's low levels, but the trade-off is that rates should experience quick upward pressure as soon as epidemiologists can confirm light at the end of the tunnel. There are competing theories on when that might be, ranging from only a few days to more than a few weeks.
Loan Originator Perspective
As soon as virus fears subside rates should go up. I feel this dip in rates is very temporary so I'm locking everything at application. - Jason Anker, Loan Officer
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.