Mortgage Rates Mixed Follow Fed Chair Testimony

Mortgage rates were mixed today following the much-anticipated congressional testimony by Fed Chair Jerome Powell.  Although these testimonies are regularly scheduled events (twice a year), they can offer important insights into the evolution of thought at the Fed.  This depends on the timing of various market movements and Fed communications, of course, as well as the questions asked by Congress.

In today's case, investors were very interested to hear what Powell thought of the market's expectations for 3 rate cuts in 2019 and whether last week's strong jobs report changed anything.  He didn't really get a direct question about the rate cut outlook, but he was unequivocal in saying the jobs report would not have an impact on the outlook.  Perhaps more importantly, in the prepared remarks released in advance of the testimony, Powell completely avoided any attempt to push back on market expectations for rate cuts.  That alone helped the bond market (which dictates mortgage rates) to begin the day in stronger territory despite spending the overnight trading session in much weaker territory.

The net effect is a landscape of lender rate sheets that are largely unchanged from yesterday.  If there's a leaning, it's toward slightly higher rates due to the bond market weakness that was in place before Powell's speech was released.  If current bond market levels are still intact by tomorrow morning, the average lender would likely be offering slightly better terms. In the bigger picture, that's not necessarily a safe bet, however, just a possibility.  Investors remain on edge for a bigger potential pull-back in rates, simply because they've had such a strong run in 2019.  Either way, it will require a bias in upcoming economic reports to cause the biggest possible moves, for better or worse.

Loan Originator Perspective

Bond markets digested Fed Chairman Powell's testimony and a treasury auction today, closing with gains that put us even for yesterday/today.  Powell speaks to US Senate Thursday, but doubt he'll have any major news.  We're still right at the top of recent rate ranges, the question is whether we bounce down, or break above that range.  I'm locking most loans closing within 45 days. -Ted Rood, Senior Originator

Today's Most Prevalent Rates

• 30YR FIXED - 3.875%
• FHA/VA - 3.5%
• 15 YEAR FIXED - 3.5-3.625% 
  
• 5 YEAR ARMS -  3.375-3.75% depending on the lender

Ongoing Lock/Float Considerations 

• Early 2019 saw a rapid reevaluation of big-picture trends in rates and in markets in general
  
  
• The Federal Reserve has been a key player, and while they aren't the ones pulling the global economic strings, their response (and even their EXPECTED response) to the economy has helped rates fall more quickly than they otherwise might.
  
  
• Based on the Fed's laundry list of concerns, the bond market (which determines rates) will be watching economic data closely, both at home and abroad, as well as trade-related concerns. 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.