Mortgage rates moved meaningfully lower over the past 2 days as panic over the coronavirus outbreak continues affecting financial markets.  If this epidemic ends up being similar to SARS in 2003, it ultimately won't be worth as much of a drop in interest rates as we've seen so far.  But the thing about brand new strains of deadly viruses is that neither the market nor the medical community knows exactly how this will unfold.  Until that picture becomes clearer, the market is preparing for more dire outcomes. 

For whatever it's worth, the timeline of the SARS outbreak spanned 2 calendar years (2002 - 2004) but the most notable market impact was confined to the space of a single month (March 2003).  We'll be a week into February before the current epidemic reaches a similar milestone.  I'm basing that on the virus being identified as "novel" back on January 9th.  If we start the clock at the beginning of the current week (when markets really began to respond to virus-related news), we've only just begun to move lower in rate.

That's a very scary thing to type and think.  With mortgage rates at 4.5 month lows, there should be a voice in everyone's head saying "they're going to have a hard time going lower than that."  That's my first instinct as well, just as almost everyone had the instinct rates were very likely heading higher in 2020.  That's the thing about markets (which ultimately dictate mortgage rates): when too many people are making the same bet, the other bet can end up being the winner.  In this case, however, I would guess we'll see a linear and logical relationship between the spread of coronavirus and rates, all other thing being equal.

Loan Originator Perspective

Corona Virus concerns continued to boost bonds Friday, and we finished the 4 day week with moderate additional gains.  I'm in no hurry to lock my March closings, but most February ones are.  Feels like we're still in the early stages of Corona concerns. -Ted Rood, Senior Originator

Today's Most Prevalent Rates For Top Tier Scenarios 

  • 30YR FIXED - 3.625 -3.75%
  • FHA/VA - 3.375%%
  • 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.  
  • 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.