May 22, 2019
Mortgage rates moved higher at a pace that was probably quicker than the average homebuyer would like yesterday. That was part of a 4 day move leading back up from the lowest levels in more than a year (or close to them, depending on the lender). That 4-day move could have easily been quite a bit longer, and it still could be, as long as we overlook today's market movement. Thankfully, it's taken rates back in a friendlier direction.
At issue is the unexpected flare-up in British politics surrounding Theresa May's referendum gambit yesterday. To be fair, the gambit was unexpected, but the flare-up makes perfect sense. Long-story short, if May is ousted (and that seems likely), it creates uncertainty surrounding a major economy and financial center. It also makes a "no-deal" Brexit more likely, which is generally seen as detracting from European economic growth prospects. All other things being equal, lower economic growth coincides with lower interest rates.
Naturally, rates in the UK moved more than in the US on this news, but in a globally interconnected market, US rates still get some benefit. The average mortgage lender is about halfway back to rates seen on Monday, with the most prevalent conventional 30yr fixed quotes remaining in the 4.125% range for top tier scenarios.
Loan Originator Perspective
Some unexpected Brexit Drama regarding Theresa May boosted bonds today, and yields slipped slightly lower. There's scant data tomorrow and an early close on Friday for Memorial Day weekend. I'm not looking for big movement today/Thursday, locking in June closings for the most part. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 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.