May 20, 2019
Mortgage rates moved microscopically higher today, depending on the lender. In terms of underlying movement in the bond market, however, rates should have risen a bit more than they did. This has to do with the timing of the bond market weakness and the amount of movement lenders typically want to see before changing their mortgage rate offerings for the day. Simply put, weaker bonds suggest higher rates, but bonds didn't weaken fast enough for most lenders to see their "re-price" threshold.
All of the above means that most lenders continued to offer rates that were very close to the lowest levels in more than a year. Only a handful of days have been any better, and all of them have occurred in the past 2 months.
Much of the credit for the recent drop in rates goes to the well-publicized trade tensions between the US and China. As the cycle of inflammatory headlines dies down, so too does the motivation for interest rates to remain as low as they have been. Granted, this is far from the only source of inspiration for interest rate movement, but it has probably been the biggest motivation over the past 2 weeks. Unless trade tensions flare up unexpectedly, or unless something else captivates markets in a similar way, there's a risk that rates will continue to rise in the short term.
Loan Originator Perspective
Looks to be a short, slow week in bond markets, with scant data and the looming extended Memorial Day weekend break. Bond markets were trending lower as of early Monday PM. I don't see much reason to float this week, for loans closing within 30 days. -Ted Rood, Senior Originator
I continue to advise clients to lock once within 30 days of funding. Going to take some major news or bad data for investors to drive rates lower than current levels. I see more upside risk to rates then downside improvement. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.0-4.125
- FHA/VA - 4.0%
- 15 YEAR FIXED - 3.875%
- 5 YEAR ARMS - 3.875-4.25% 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 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. The stronger the data, the more rates could rise, while weaker data could 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.