What a difference a week makes! At the end of last week, things were pretty grim, with mortgage rates having just seen their worst single week since 2013. The uplifting caveat at the time was that such bouts of nastiness are not that uncommon in the wake of ultra strong performances (such as the entire month of August–the best single month since 2002 if you can believe it!). In other words, last week was a correction to August’s impressive strength.
With that in mind, this week turned out to be a correction to last week’s correction! There was no way to be sure, but we were hoping it was overdone and that bond traders would step in to buy bonds (which pushes rates lower) in response to the big move. That’s exactly what happened and it resulted in measured improvements throughout the week. Ironically, it was only really the day that the Fed cut rates that saw a less upbeat performance.
From here, market participants are intently focused on economic data and trade-related updates. The takeaway from Wednesday’s Fed events was that the Fed will be nimble and openminded about cutting OR HIKING rates depending on the evolution of economic momentum. While I’ve argued incessantly that the Fed Funds Rate doesn’t dictate mortgage rates, I’ll be the first to tell you that CHANGES in the FUTURE outlook for the Fed Funds Rate would have a big impact.
Loan Originator Perspective
Well, it’s starting to feel like we’ve weathered the storm for now with respect to the September correction. It doesn’t mean we’re out of the woods yet even as we’re only 2 days removed from Fed Day. I’m keeping an eye on the 1.82% level, which is just above where we are now for a lock trigger for any short term deals. But as long as we stay under 1.82%, we’ll see if we can make a move lower again. I’d expect a slower grind lower, if we get it. But again, the finger is close to the lock button these days. – Jeff Anderson
Today’s Most Prevalent Rates
- 30YR FIXED -3.75%
- 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.