September 10, 2019
Mortgage rates and the broader bond market are both in the midst of a correction after hitting the best levels in more than 3 years last week. This is a correction that many market watchers were worried about on several occasions in August. But every time it looked like rates had bottomed, it only took a few days of indecision before they were again pressing into new long-term lows.
This most recent break from long-term lows has been far more threatening with 2 of the past 4 business days bringing the biggest single-day jumps in several months. As a result, the average lender is now back to offering rates last seen in early August.
Notably, a conventional 30yr fixed rate of 3.75% is right in the neighborhood of what many borrowers would be quoted today. That said, for many lenders 3.75% makes no sense. The reason has to do with structure of the secondary mortgage market. Long story short, it only costs the average lender a tiny bit more to offer 3.625%.
So what should you do? Simply put, if you're being quoted 3.75% on a conventional 30yr fixed, ask your lender what it would cost to buy the rate down to 3.625% and compare the monthly savings against the additional upfront expense. It might be less than you anticipate.
Loan Originator Perspective
Bonds sold off heavily again Tuesday, continuing their 4 day swoon. It's time to play defense, I am locking new applications closing within 45 days. The lows have come and gone, now it's about how high we go from here. The trend is not our friend. - Ted Rood, Senior Originator
Today's Most Prevalent Rates
- 30YR FIXED - 3.625 or 3.875% (not 3.75%)
- FHA/VA - 3.25-3.5%
- 15 YEAR FIXED - 3.25-3.375%
- 5 YEAR ARMS - 3.25-3.75% 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.