May 23, 2019
Mortgage rates dropped quickly today as global financial markets underwent a volatile shift. When money is flowing out of stocks and into bonds (as it was today) rates move lower. There are several underlying reasons for the move and it's impossible to assign a value to each of them with perfect precision. Several of the most noticeable ingredients include: ongoing trade tensions, political upheaval in Britain, and weak economic data early in the day. Even though "stock selling" can be seen as an "effect" as opposed to a "cause," it was big enough that it created additional momentum for the bond/rate market. Simply put, when that much money is flowing out of stocks, it needs a safe place to hide. That place is often the bond market.
The net effect for mortgage rates hasn't been fully realized yet. Mortgage lenders set rates at the beginning of the day and they don't tend to change their offerings unless markets make a very big move. Today's very big moves came in several phases and lenders only accounted for a little more than half of the underlying change in bond markets. Nonetheless, the average lender ended the day in line with the lowest rates in more than a year. If bond markets merely hold steady by tomorrow morning, mortgage rates will be even lower.
Loan Originator Perspective
Bonds rallied sharply today, amid a stock rout, poor new home sales data, and continued US and Brexit political drama. In uncertain times, investors buy bonds, and that's what we're seeing. As of early afternoon, at least 20 lenders improved on their morning rates. I'm holding all locks, at least until tomorrow AM, since rate sheets don't fully reflect market gains yet. -Ted Rood, Senior Originator
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.