Mortgage rates plunged today as the bond market extended its positive reaction to yesterday's Fed announcement.  The Fed doesn't set mortgage rates, but the market's expectation of Fed rate-setting policy has a major impact.  In other words, because the Fed generally confirmed the market's suspicion that rate cuts could be warranted in 2019, traders were willing to push rates even lower than they already had in advance of Fed day.

Some lenders had already adjusted rate sheets yesterday afternoon to account for the bond market improvements that were already in place.  In those cases, the surge to lower rates wasn't quite as epic.  But for lenders who kept the same rates intact all day yesterday, there was a huge shift this morning, with the average lender improving by an entire eighth of a percent (0.125%).  Moves of that size only happen a few times a year, and we've definitely gone entire years without seeing it happen at all.

The average lender was quoting rates in the high 3's this morning--mostly in the 3.75-3.875% range.  As the day progressed, bonds bounced and multiple lenders adjusted rates back toward higher levels.  Simply put, bond markets are conveying that all of yesterday's improvements remained intact, but today's gains were erased.  If lenders aren't caught up with that reality by this afternoon, they will be by tomorrow morning (unless bonds undergo a big move overnight).

Loan Originator Perspective

Bonds rallied sharply this AM, then sold off ferociously in after hours trading.  It's not unusual to see large losses follow rapid rallies.  Today represented a great short term lock opportunity for those close to closing.  It'll be interesting to see tomorrow's pricing after today's huge swings. -Ted Rood, Senior Originator

Today's Most Prevalent Rates

• 30YR FIXED - 3.875%
• FHA/VA - 3.5-3.75%
• 15 YEAR FIXED - 3.75% 
  
• 5 YEAR ARMS -  3.625-4.125% depending on the lender

Ongoing Lock/Float Considerations 

• Early 2019 saw a rapid reevaluation of big-picture trends in rates and in markets in general
  
  
• The Federal Reserve has been a key player, and while they aren't the ones pulling the global economic strings, their response (and even their EXPECTED response) to the economy has helped rates fall more quickly than they otherwise might.
  
  
• Based on the Fed's laundry list of concerns, the bond market (which determines rates) will be watching economic data closely, both at home and abroad, as well as trade-related concerns. The stronger the data and trade relations, the more rates could rise, while weaker data and trade wars 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.