Mortgage rates have primarily been at the whim of the general tone of coronavirus news for the past few weeks.  That meant a swift move to multi-year lows followed by an uneven correction back toward higher levels.  But the correction has been anything but threatening, and it stands in stark contrast to a much sharper correction seen in the stock market (i.e. stocks quickly got over coronavirus fears and returned to all-time highs).

Why are rates able to hang tough at levels that are still quite close to long-term lows while other parts of the market seem to have moved on?

Although the US stock market has moved on to some extent, Asian equities markets have not.  They are pricing in the global economic impact that will ultimately be seen due to coronavirus.  Granted, that impact may not be huge in the big picture, but it's something to adjust for nonetheless.  The US bond market (which dictates rates), is generally much more concerned with accounting for future economic probabilities.

In addition to coronavirus-related news, we heard from several Fed speakers this week including Fed Chair Jerome Powell.  Their message is clear.  Not only should we not expect a rate hike any time soon, but we should also expect the Fed to enact friendlier policies if the economy needs them or if inflation fails to move up as expected.  Such policies generally put downward pressure on rates, but they tend to helpful for stocks as well.  

Loan Originator Perspective

A flat Friday closed out a flat week for bond markets, with little pricing change noted.  Markets will be closed for Presidents' Day Monday, and there's not a great deal of data on tap for next week.  With rates still near multi-year lows, I am locking loans closing within 30 days. - Ted Rood, Senior Originator

Today's Most Prevalent Rates For Top Tier Scenarios 

  • 30YR FIXED - 3.375 - 3.5%
  • FHA/VA -3.25%
  • 15 YEAR FIXED - 3.125-3.25% 
  • 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 (and more recently, the coronavirus outbreak).  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 updates on other factors like trade and viral epidemics. The stronger the data the more rates could rise, while weaker data 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.