Mortgage rates recovered today after rising to the highest levels in a week as of yesterday.  The improvement followed a much-weaker-than-expected Retail Sales report--something investors have been waiting on for nearly 2 months due to the government shutdown. 

Retail sales comprise an important part of economic activity, and the economy is one of the biggest considerations for interest rates.  Generally speaking, economic strength pushes rates higher, all other thing being equal.  Thus, the unexpectedly weak retail numbers had the opposite effect. 

How big was the effect?  Not quite as big as most other media outlets would suggest.  The discrepancy is due to the regular Thursday release of the industry's most widely-cited mortgage rate report from Freddie Mac.  While that report is accurate for the days when it receives responses, those responses tend to come in on Monday and Tuesday primarily.  Thursday and Friday aren't even measured.  As such, if rates make a big move on the last 2 days of any given week, that will only be reflected in Freddie's numbers if markets hold steady in the following 3 business days.

That didn't happen over the past 2 weeks.  In both cases, Thursday brought significant improvements in rates only for that improvement to be largely erased by the following Tuesday.  That's left us with some higher numbers from Freddie compared to the actual averages.  And if we look at individual days, we would see the lowest rates of the year on January 31st, followed closely be Feb 8th.  Today's rates are good, but we're not quite back to the previous 1-year lows.  

Loan Originator Perspective

Bond markets rallied today, as tepid retail sales data trumped slightly higher inflation numbers.  Treasury yields are now near Monday's levels.  Great to see the support for both treasuries and MBS.  I'll lock applications closing within 30 days for most clients, probably wait on those closing further out.  -Ted Rood, Senior Originator

Today's Most Prevalent Rates

  • 30YR FIXED - 4.375 - 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.