June 21, 2019
Mortgage rates have had an impressive run--the best since 2011, in fact, when it comes to total peak to trough movement. That winning streak might not even be over, but every time rates bounce recently--even if only slightly--it's cause for concern. For one of a few potential reasons, these big moves in rates only last so long. This one is big enough and long enough that it makes sense to keep an eye out for the big shift.
In fact, if you're in the process of buying or refinancing (or if you work in the mortgage/housing market) it makes sense to keep an eye out for temporary shifts! That's the area of greatest concern currently. Following this week's Fed meeting, rates extended their fall to the lowest levels since November 2016. But since then, the underlying bond market has bounced in such a way that suggests rates aren't interested in further gains just yet.
It's too soon to know if today was just a pause in the action for rates (they were only slightly higher today and still very low in the bigger picture) or if it was an ominous sign preceding a bigger jump. Either way, the risk of volatility is increasing rapidly due to several events on the horizon in the next 2 weeks (G20 summit next week and important economic data in the first week of July).
Loan Originator Perspective
Bonds retreated today, following up on yesterday's PM losses. Looks like (for the moment) military strikes against Iran are on hold, and there's rumors of Chinese tariff progress. We've likely seen our short term lows, but are still dang close to them. I'm locking loans closing within 30-45 days. -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.625% OR 3.875%*
- FHA/VA - 3.5-3.75%
- 15 YEAR FIXED - 3.75%
- 5 YEAR ARMS - 3.625-4.125% 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 (and even their EXPECTED 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, as well as trade-related concerns. The stronger the data and trade relations, the more rates could rise, while weaker data and trade wars will 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.
*for most lenders, 3.75% is not priced competitively for complicated reasons surrounding the structure of the underlying market for mortgage-backed securities. It makes more sense for those lenders to quote 3.625% if they would otherwise be quoting 3.75%. They'll make more money that way and your payment will be lower. This is a temporary win/win that will go away once the secondary market adjusts to the new, lower rates (or once rates bounce higher... we'll hope it's the former).