Mortgage rates didn't move at all, again today.  There really hasn't been any meaningful movement for more than 3 weeks.  The same thing happened from late June through mid July.  And if we broaden our definition of "sideways" just a bit, we can legitimately fit most of 2018 into the same conversation.  Just about the only thing that's interesting about recent rate movement is that it continues to keep us generally closer to the highest levels in 7 years.

Part of the current problem is simply the time of year.  It's not uncommon to see underlying bond markets consolidate at some point in the summertime months before breaking higher or lower in September.  The difference this time around is that part about 2018 being broadly sideways for the entire year.  That would seem to suggest indecision among traders as to whether or not long-term rates (like 10yr Treasury yields and mortgages) really need to move any higher.  After all, the fact that they "needed" to move higher was (and still is) so abundantly clear based on market fundamentals that traders are making a record amount of bets on rates continuing to rise.  Paradoxically, this could be a blessing in disguise because when everyone is making the same bet in financial markets, no one makes money and something has to change.  


Loan Originator Perspective

Bonds slumbered through the day, as rates remained flat.  Tomorrow promises to be even less eventful, as traders head out for the holiday weekend.  I'm still locking loans closing within 30 days, and some that are within 45 days.  Happy Almost Labor Day!-Ted Rood, Senior Originator


Today's Most Prevalent Rates

  • 30YR FIXED - 4.625-4.75
  • FHA/VA - 4.25-4.5%
  • 15 YEAR FIXED - 4.125%
  • 5 YEAR ARMS -  3.75-4.25% depending on the lender


Ongoing Lock/Float Considerations 

  • Rates moved higher in a serious way due to several big-picture headwinds, including: the Fed's rate hike outlook (and general policy tightening), the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.

  • Despite those headwinds, the upward momentum in rates has cooled off heading into the summer months.  This could merely be the eye of the storm, or it could end up being the moment where markets began to doubt that prevailing trends would continue.

  • It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won't die down quickly.  Temporary corrections can be explained away, but it will take a big change in economic fundamentals or geopolitical risk for the big picture to change.  While that doesn't necessarily mean rates have to skyrocket, there's a good chance it means rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up.
  • 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.