September 21, 2018
Mortgage rates actually fell today, on average--something they haven't been able to say all week, or indeed at nearly any time during the past 4 weeks. Yesterday, in particular, was the worst day for rates since 2011 for most lenders, with anything less than an ideal loan scenario garnering 30yr fixed quotes of 4.875% to 5.0%. With all of the above in mind, today's token improvement isn't necessarily exciting, but at least it's better than the alternative.
Much of this week's rapid rise was seen in the first half of the week. Starting on Wednesday afternoon, markets began settling into a more sideways pattern, apparently getting in position for more volatility in the coming week. If there's an event that's likely to serve as the catalyst for that volatility, it's the Fed Announcement on Wednesday afternoon. Everyone already agrees the Fed will hike its policy rate, but investors are curious to see how the Fed's updated rate hike projections look. They're also interested in hearing what Fed Chair Powell has to say at the press conference that follows the announcement.
Loan Originator Perspective
Friday was a quiet day in bond markets, but capped a week which saw rates hit 8 year highs. While "not losing" beats losing ground on rates, there's still no glimmer of hope on the horizon apparent to me. Until something big changes, I'm locking at origination for loans closing within 60 days, for all but the most risk-craving clients. -Ted Rood, Senior Originator
I continue to favor floating for right now. Bonds are in the green and lender pricing still seems to have some extra cushion. If you can stomach the risk, i would float til Monday morning and re evaluate pricing at that time. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.75-4.875%
- FHA/VA - 4.5%
- 15 YEAR FIXED - 4.25%-4.375
- 5 YEAR ARMS - 3.75-4.25% depending on the lender
Ongoing Lock/Float Considerations
- Rates moved higher in a serious way due to 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.
- Rates cooled off heading in the summer months, but that proved to be the eye of an ongoing storm. As long as economic data remains strong, rates can continue to move higher in general, even though there may be brief periods of correction.
- It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly. It will take a big change in economic fundamentals or geopolitical risk for the big picture to change.
- 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.