August 9, 2019
Mortgage rates moved lower today even though the broader bond market suggested they should have remained flat or higher. In several of this week's previous articles, we've discussed the volatility that's been wreaking havoc on the world of mortgage rate setting for lenders. Simply put, when the moves get bigger and when the direction changes more frequently, mortgage rates take extra damage relative to Treasury yields (a risk-free benchmark for most any other rate in the US).
Conversely, when rampant volatility begins to ebb, lenders are able to repair some of that damage. The steadier the broader bond market can remain, the more we may see mortgage rates fall, even if outright trading levels aren't suggesting as much of an improvement. More simply put, the 10yr Treasury yield is at 1.738% at the moment I'm writing this. If it were to stay in a range between 1.70% and 1.75% all next week and end at 1.738% again, mortgage rates would be noticeably lower. These dynamics don't always apply, but they apply doubly when mortgages are recovering from big volatility after a big move lower.
Loan Originator Perspective
Bonds posted small gains this morning, as inflation data this AM was below projections. The afternoon was weaker, but not alarmingly so. My pricing improved slightly from Thursday's. I'm locking new applications closing within 30 days, floating most closing further out. As always, if you like your pricing, lock it up and don't look back. "One in the hand......." -Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.625 - 3.75%
- FHA/VA - 3.375-3.5%
- 15 YEAR FIXED - 3.375%
- 5 YEAR ARMS - 3.375-3.75% depending on the lender
Ongoing Lock/Float Considerations
- 2019 has been the best year for mortgage rates since 2011. Big, long-lasting improvements such as this one are increasingly susceptible to bounces/corrections.
- Fed policy and the US/China trade war have been key players
- The Fed and the bond market (which dictates rates) will be watching economic data closely, both at home and abroad, as well as trade war updates. 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.