January 30, 2020
Mortgage rates improved again today as the market continued to react to updates on the coronavirus outbreak. For top tier scenarios, the average lender is now offering rates not seen since 2016, with the slight exception of a few hours during the beginning of September 2019. Even then, today's rates at least match Sept 2019's rates on average. In other words, today is tied for the lowest levels in more than 3 years.
To reiterate yesterday's message: 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's some risk that we're already seeing the first potential turning point this afternoon as the World Health Organization officially declared coronavirus to be a public health emergency. That sounds like a bad thing, but it actually signals an intensification of efforts and resources to contain the virus. The market reacted accordingly with bonds weakening (weaker bonds imply upward pressure on rates). Fortunately, the weakness hasn't spilled over from US Treasuries to mortgage rates yet, but that may not be the case tomorrow. At the very least, risks of a bounce are elevated relative to where they have been so far this week.
Loan Originator Perspective
Bond yields neared last September's multi-year lows today, as Wuhan virus concerns continued to inform trading. My pricing is best it's been since September, and I took the opportunity to lock several loans. We "may" improve from here, but feels like we've seen the bulk of any imminent improvement. Risk averse clients should look hard at locking, if within 45 days of closing. - 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.