Just When You Thought Rates Wouldn't Go Any Lower

By: Matthew Graham •

Mortgage rates were already in great shape on Friday after having fallen to the lowest levels since November 2016.  Rather than draw inspiration from the week's big ticket events (Fed announcement and jobs report), the biggest source of inspiration was a flare-up in trade tensions following Trump's announcement of new tariffs on Chinese imports.  Trade war drama flared over the weekend as China's central bank set the country's currency at the weakest levels in more than a decade.

What does Chinese currency have to do with US mortgage rates?  Quite a lot, really!  The outright level of Chinese Yuan versus the US dollar is not what's important here.  Rather, it was the fact that such a move was directed by the Chinese government in an obvious retaliation to Trump's trade war escalation.  In other words, if the US is going to raise tariffs, then China is going to cheapen its currency so the US will be able to keep buying Chinese goods.  Simply put, this is another major escalation of the trade war.   That's clearly negative for the global economy and economic weakness helps rates move lower. 

 See Rates from Lenders in Your Area

Mortgage-backed securities (MBS)--the bonds that directly influence mortgage rates--have a hard time keeping up when financial markets are this volatile.  Mortgage lenders also tend to proceed cautiously when dropping rates to multi-year lows in the midst of a these sorts of big market swings.  That means mortgage rates haven't dropped nearly as quickly as Treasury yields, but they're nonetheless at the lowest levels since November 2016 today.  


Loan Originator Perspective

China/US trade drama continues to fester, and bonds are prospering as economic growth projections decline.  Treasury yields hit their lowest point since  November 2016 and, for all appearances, this conflict won't be easing soon.  Because bonds have rallied so far, so fast, rate sheets don't reflect the full gains yet.  I'm in no hurry to lock here. -Ted Rood, Senior Originator

I anticipated a 1.75 10 Year but not quite as fast as it occurred. Nice low yield but not a lot of movement in pricing on capacity concerns. Locking cautiously at this point. -Al Hensling


Today's Most Prevalent Rates

  • 30YR FIXED - 3.5% - 3.75% (wider range than normal due to volatility)
  • FHA/VA - 3.25%
  • 15 YEAR FIXED - 3.375% 
  • 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.