January 6, 2020
Mortgage rates moved lower again today, bringing them deeper into the lowest levels in more than a month. There were no specific motivations for the improvement apart from the typical day-to-day changes seen in the underlying bond market.
More simply put, mortgage rates move when bonds move, and the latter can frequently be seen reacting to some development in the news or in response to a specific economic report. Today, however, bonds showed no clear predisposition to move higher or lower. That's a good thing considering Friday's movement was largely friendly for rates and that lenders were being somewhat cautious about dropping rates as quickly as the bond market suggested.
Starting tomorrow morning, there will be more data for bonds to digest. If it's generally weaker than expected or if geopolitical risks continue to flare, rates could continue to improve. But we could just as easily see upward pressure in the event of stronger data (or de-escalation in US/Iran tensions).
Loan Originator Perspective
Bond markets mulled further Mideast drama today, advancing slightly through mid-PM trading. While there hasn't been any Iranian retaliation yet, the chances of further conflict seem high. I'm in no hurry to lock my February closings yet, let's see where this goes first. -Ted Rood, Senior Originator
Today's Most Prevalent Rates For Top Tier Scenarios
- 30YR FIXED - 3.75%
- FHA/VA - 3.375%%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 3.25-3.75% 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. 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.
- 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.