November 14, 2018
Mortgage rates began the day in roughly unchanged territory. Some lenders were microscopically stronger or weaker compared to yesterday, but not enough to impact the average mortgage borrower. For the first few hours of the day, it looked as if rates would stay unchanged or possibly move slightly higher. That all changed when stocks began losing ground.
It's always worth remembering (and this will be especially true when the next time it's proven) that there's no magic rule that says stock prices and interest rates must move in the same direction. It is true that there are frequent examples of such correlation, but there are plenty of other examples where the correlation complete breaks down. All that to say that stock losses helped rates today, but will not always necessarily help rates in the future.
Bond markets (which underlie mortgage rates) improved by enough this afternoon for most lenders to release "positive reprices" (where a lender recalls the morning's mortgage rate offerings and replaces them with less costly offerings). These reprices were modest by most standards, but they could be enough to make a meaningful difference for a prospective borrower who avoided locking last week in the hopes of a recovery this week.
Loan Originator Perspective
Bond markets caught a break today, as Brexit drama prompted safe haven demand. The unknown factor is whether we'll retain them if/when Brexit is resolved. Although some lenders repriced better mid-day, I think it's worth waiting for tomorrow's rates to come out before locking. There's some smoke, let's see if it turns into a Brexit fire. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 5.0%
- FHA/VA - 4.5%-4.75%
- 15 YEAR FIXED - 4.5%-4.625%
- 5 YEAR ARMS - 4.375%-4.875% depending on the lender
Ongoing Lock/Float Considerations
- Rates continue coping with several big-picture headwinds, including: the Fed's rate hike outlook (and general policy tightening), the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation (which certainly seems to be the case so far in 2018).
- While rates were able to recover and stay sideways in the summer months, September and October have seen a surge up to the highest levels in more than 7 years.
- Upward pressure can continue as long as economic growth and inflation continue running near long-term highs. Stay defensive (i.e. generally more lock-biased). It will take a big change in economic fundamentals or geopolitical risk for the big picture to change. Such things tend to not happen as quickly as we'd like.
- 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.