Mortgage rates are most directly affected by the day to day movement in the bond market. It's interesting to consider that bonds improved quite a bit today, even though mortgage rates were only modestly higher. In fact, some lenders continued showing rates that were roughly similar to yesterday's. What gives?!
Part of the problem is that yesterday saw bond markets fall (which implies higher rates) throughout the day, but not enough for many lenders to go to the trouble of changing their rate sheet offerings. As such, they were left to raise rates this morning, assuming the bond market stayed at yesterday afternoon's levels. But because bonds improved today, lenders didn't have to catch their rate sheets up to yesterday's bond market weakness.
In the afternoon, we saw a sort of mirror image of yesterday where bonds improved enough for some lenders to update rate sheets for the better, but this wasn't the case for many lenders. With that, the average remained a bit higher than it will be on Monday, assuming current bond market trading levels last until then. For what it's worth, that's not a risk that usually makes sense, but it's a bit less risky than normal today.
Loan Originator Perspective
Bonds remained locked in a narrow consolidation range today, as both MBS and treasuries touched their recent low yields. Since rates have bounced higher the last 4 times we hit recent lows, I'm locking loans closing within 45 days. Happy Friday! -Ted Rood, Senior Originator
Bonds have recovered all of yesterday's losses and some!! My rate sheets do not reflect the improvement, so my recommendation is to float over the weekend. If you lender reprices for the better today, then it would be wise to go ahead and lock in. -Victor Burek, Churchill Mortgage
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.