Mortgage rates dropped convincingly today, bringing them to new long-term lows.  The average lender hasn't offered anything lower for more than a year (January 2018).  The improvement came on a combination of news headlines, economic data, and the scheduled sale of US 10yr Treasury debt.   

The news headlines in question pertain to Brexit.  To oversimplify a complicated topic, there had been some hope for a compromise Brexit deal overnight.  Such a deal would ease some concerns about uncertain market outcomes.  That uncertainty has helped keep rates lower, so clearing it up meant upward pressure on rates.  As the day progressed, however, the compromise deal fell apart, and rates moved lower accordingly. 

Economic data also has an impact on rates.  In this case, it was the Consumer Price Index (an inflation gauge) that was lower than expected.  Low inflation is good for rates!

Finally, the 10yr Treasury auction is a good gauge of demand for bonds.  Higher demand for bonds means lower rates.  The results of the auction were strong, which led to bond market improvement in the afternoon.  After a certain amount of bond gains, mortgage lenders will typically reissue their rates for the day (with better terms, as was the case this afternoon).

Loan Originator Perspectives

Bonds are currently holding below resistance at 2.62.   If we close below that level, i think it is worth the risk to float overnight.   If you do wish to lock today, hold off until as late as possible.   A few lenders have already repriced for the better and more are sure to come. -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.