Mortgage rates were flat for the 4th day in a row today in a sign that investors have largely taken their seats for tomorrow's big show. The Fed will release its new policy statement at 2pm tomorrow, and while they're not expected to hike rates this time around, there are other important considerations that could have a big impact on rates.
One of the considerations is the fact that March is one of the months where the Fed updates its economic projections. Investors largely tune-in to these for a glimpse at the collective rate hike outlook. This has caused big market movement in the past, but something else could be even more important tomorrow.
The Fed has increasingly mentioned the impending end of its balance sheet runoff, which refers to its policy of NOT buying bonds with the money it receives when its existing bonds are paid off. If the Fed ends the runoff, it will suddenly be a big bond buyer again, and big bond buyers are good for rates!
The Fed has flat-out said that the balance sheet runoff should end this year, but tomorrow's announcement (or the press conference that follows it) could help markets get a much clearer idea of exactly when and how that might happen. Those details matter. The sooner it happens and the less gradual the phasing-in, the better it would likely be for rates. If, on the other hand, the Fed leaves things vague and mentions a piecemeal approach closer to the end of the year, bond markets could be disappointed, and rates could move higher quickly.
Loan Originator Perspective
Bonds traded in tight ranges today, remaining near their best levels in a year+. Economic concerns are persisting, and tomorrow's Fed Statement will be carefully parsed for their expectations. I don't see much upward pressure on rates, but still locking clients within 30 days of closing.-Ted Rood, Senior Originator
With MBS holding near multi month lows, i think locking in is the wise move. We get the FED tomorrow and if they are at all bullish, then rates will head higher. Not sure if there is much more room for rates to drop significantly from current levels. So, more to risk than to gain by floating. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.375%
- FHA/VA - 4.0-4.125%
- 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.