Mortgage rates moved quickly higher today following stronger-than-expected economic data.  Rates are driven by the bond market.  Bonds are safe-haven assets.  When the economy is stronger, investors are less likely to to buy safe-haven assets.  As demand for bonds drops, it's the same as investors demanding higher rates of return before buying.  In other words, it all adds up to the end user needing to pay a higher rate.

Today brought the release of two economic reports and both were strong.  First up was the 2nd revision of Q4 GDP.  Investors were prepared for this to fall short of analysts' expectations due to the government shutdown and other year-end headwinds.  Instead, it beat the forecast by 0.3% (2.6 vs 2.3 forecast).  After that, a closely watched regional business survey from the Chicago Fed district  sent the same message by easily beating its forecast. 

In response to the data, underlying bond markets weakened--that is, they moved lower in price and higher in yield/rate.  Many mortgage lenders were forced to adjust their rate sheet offerings accordingly.  By the end of the day, the average lender was back up to rates last seen on February 15th. 

Loan Originator Perspective

Bonds sold off today, as rates neared their one month highs.  Tomorrow brings inflation data,  which could push rates higher.  I'm locking loans closing within 30 days. -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.