RATES ARE LOW!!!!

Rates Are Still Falling, But Not Precipitously Oct 2 2019, 4:49PM

Matthew Graham

Mortgage rates are historically quite low and they managed to continue lower today.  This is in addition to a steady string of improvements that began more than 2 weeks ago.  But whereas other parts of the financial market are making some of the biggest moves in months right now, the mortgage market is barely moving by comparison.  

The reason for this is the same as it has been every time we’ve discussed it in the past few months.  The bonds that underlie mortgage rates are not able to keep pace with the broader bond market when things get volatile.  The bigger the move and the more rates vacillate between strength and weakness, the worse it is for the mortgage market. 

Volatility doesn’t show signs of stopping, but as always, it will depend on the news and data in the coming days.  Both tomorrow and Friday bring significant economic reports–either of which has the power to push the broader bond market in either direction.


Loan Originator Perspective

Bonds posted strong gains amid stocks’ swoon Wednesday, as ADP’s jobs report was revised downward for August and DC impeachment drama grew/  While this is a tempting opportunity for floating borrowers to lock, I’m holding off most locks over 30 days, think we haven’t seen rates’ October lows yet. 


Today’s Most Prevalent Rates

  • 30YR FIXED -3.625%
  • FHA/VA – 3.375%
  • 15 YEAR FIXED – 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 and as of September, it looks like such a correction is underway

  • Fed policy and the US/China trade war have been key players.  Major updates on either front could cause a volatile reaction in rates

  • 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.

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