Mortgage rates continued moving higher today as Fridays unfortunate series of events seems to have motivated a big bounce.  What events are those?  Namely, we're talking about several important economic reports including the big jobs report and the most closely-watched manufacturing report from ISM.  These were joined by two other supporting actors (Consumer Sentiment and Factory Orders) to round out an entire morning of data that came in much stronger than expected.

But wait... why is strong economic data a bad thing?!

A fair question!  After all, don't we like a strong economy?  If by "we," you mean the average person on the street, then yes!  If, on the other hand, you mean mortgage rates (or simply those who would prefer to see mortgage rates fall), then no... a stronger economy is the enemy.  Reason being: rates are driven by bonds, and bonds tend to outperform when investors are seeking protection from risk, or simply when there's reason to doubt the ability to earn decent returns elsewhere.  And there's nothing like economic weakness to create that doubt!

Simply put, weaker economy = lower rates, and vice versa. 

Friday's economic data was particularly striking in light of the Fed's announcement on Wednesday which called out economic risks at home and abroad as justification for being patient with rate hikes and generally friendly with policies that benefit the bond market.  As such, surprisingly strong data caused investors to call the Fed's stance into question, and we've since moved almost perfectly back to levels seen just before the Fed.  In other words, this has been logical weakness, even if it's unpleasant for fans of low rates.

The good news is that US Treasury yields have been suffering more than mortgages.  Apart from the last 3 business days, rates are still in line with their lowest levels in months.  

Loan Originator Perspective

Bonds trudged slightly weaker today on the heels of Friday's selloff.   Looks like we've seen rates' short term lows as Friday's blockbuster jobs report definitely dropped demand for bonds.  I'm locking applications closing within 30 days, and going case by case for those closing 30-60 days. -Ted Rood, Senior Originator

Today's Most Prevalent Rates

  • 30YR FIXED - 4.5
  • FHA/VA - 4.125 - 4.25%
  • 15 YEAR FIXED - 4.0 - 4.125%
  • 5 YEAR ARMS -  4.25%-4.625% depending on the lender

Ongoing Lock/Float Considerations

  • Headwinds that had plagued rates for most of the past 2 years began to die down in late 2018.  A rapid decline in the stock market certainly helped drive investors into bonds (which helps rates) Highest rates in more than 7 years in Oct/Nov.  8-month lows by the end of the year

  • This is a bit of a crossroads. The rising rate environment could flare up again.  We may look back at Oct/Nov and see a long-term ceiling, or we may look back at early December and see a temporary correction before more pain. 

  • Either way, late 2018 was a sign that rates are willing to take opportunities presented to them.  From here, it will be up to economic data, fiscal policies, and the stock market to decide on the next set of opportunities.  The rougher the overall outlook, the better interest rates tend to do.
  • 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.