March 22, 2018
Mortgage rates continued lower today on a combination of global reaction to yesterday's Fed Announcement and apprehension over new tariffs on China. The Fed Announcement was positive due to Jerome Powell's press conference--an event that happens late enough in the day that overseas markets don't really have a chance to react. Because of that, domestic markets sometimes hold back a little until they can feel out the global reaction.
In other words, rates were pretty sure they were headed even lower yesterday afternoon, but they wanted to see how the rest of the world felt about it. Turns out, everyone felt pretty good about it, thus delivering the first ingredient in today's improvement. The tariff and "trade war" narrative was the 2nd ingredient, but it was a bigger deal for stocks, which ultimately saw heavy losses by the end of the day. Bonds--which dictate rates--still had a great day, but shied away from following stocks to new lows in the afternoon.
The net effect is a mortgage rate environment that's largely in line with Monday's levels. The bonds that underlie mortgages didn't get as much love as the broader bond market. Beyond that, mortgage lenders have been hesitant to make major adjustments to rate sheets. The average lenders is still quoting top tier conventional 30yr fixed rates in the 4.5-4.625% range.
Loan Originator Perspective
Bond yields drifted toward recent lows today, as loan pricing improved from yesterday's. We're not breaking any recent ranges, but any gains are welcome. I'm still locking early, our rallies these days are agonizingly brief. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 4.5-4.625%
- FHA/VA - 4.375%
- 15 YEAR FIXED - 3.875%
- 5 YEAR ARMS - 3.5-3.75% depending on the lender
Ongoing Lock/Float Considerations
- 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.
- While rates remain low in absolute terms, they moved higher in a more threatening way heading into the beginning of 2018
- The scariest part of the move higher looks like it ended as of early February, and rates have been generally sideways since then
- Even so, the potential remains for more weakness (i.e. higher rates). It makes more sense to remain defensive (i.e. more inclined to lock) until we've seen a more convincing shift lower.
- 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.