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Updated: 15 min 14 sec ago

Lowest Rates in 8 Years, But All Kinds of Disclaimers

51 min ago
Mortgage rates hit the lowest levels in 8 years either today or yesterday, depending on the lender, just narrowly edging out the rates seen in early July 2016. There are multiple caveats, however. First off, lenders are responding to recent market movements in different ways. Some lenders move down faster and then remain flat even as the bond market (which dictates rates) improves. Other lenders have been slow to react, but have since moved down more steadily. Still others are somewhere between those extremes. Perhaps the most important thing to note about mortgage rates this week is that, while they are certainly at long-term lows, they are absolutely NOT moving lower as fast or as much as US Treasury yields. I discussed this in greater detail in the previous rate article and then again this
Categories: Mortgage News

Important Lessons From Near-Record Low Mortgage Rates

Mon, 02/24/2020 - 20:24
Mortgage rates continue to carve out the unlikeliest of victories in 2020 with significant help from coronavirus. The epidemic has taken a year that was almost certain to start off with a steady move toward higher rates and turned it into one of the strongest starts on record. In fact, when it comes to the combination of ground covered and levels achieved, no other year has started off any better. Other years have seen a similarly big drop in rates during Jan/Feb, but there aren't many. Of those years, 2016 was the only one to remotely match the rates we're currently seeing. Unless tragedy strikes the mortgage world by the end of this week, 2020's late February rates will be roughly 0.25% lower than they were in 2016. But rates ultimately did move lower in 2016 after the Brexit vote in late
Categories: Mortgage News

Mortgage Rates Back Near Multi-Year Lows

Thu, 02/20/2020 - 16:36
Mortgage rates haven't been this low for this long in years--3.5 years to be exact. Brexit was the talk of the town in the middle of 2016 and it resulted in rates very close to all-time lows for well over 3 months (all of July, Aug, Sept). Although rates aren't quite as low this time around, they average lender is still quoting 3.5% or lower on top tier scenarios. That's only happened on a consistent basis in 2016 and 2012. Moreover, the current stint is approaching a month in length. Combine that with the fact that rates haven't been over 3.875% since the middle of 2019, and the current mortgage environment is more than worthy of being viewed in the same legendary light as 2012 and 2016. In 2012 it was the European crisis and massive central bank bond buying. In 2016 it was Brexit and massive
Categories: Mortgage News

Mortgage Rates Hangin' Tough Despite Stock Market Recovery

Fri, 02/14/2020 - 17:26
Mortgage rates have primarily been at the whim of the general tone of coronavirus news for the past few weeks. That meant a swift move to multi-year lows followed by an uneven correction back toward higher levels. But the correction has been anything but threatening, and it stands in stark contrast to a much sharper correction seen in the stock market (i.e. stocks quickly got over coronavirus fears and returned to all-time highs). Why are rates able to hang tough at levels that are still quite close to long-term lows while other parts of the market seem to have moved on? Although the US stock market has moved on to some extent, Asian equities markets have not. They are pricing in the global economic impact that will ultimately be seen due to coronavirus. Granted, that impact may not be huge
Categories: Mortgage News

Mortgage Rates Still Giving Back Coronavirus Gains

Wed, 02/12/2020 - 17:12
Mortgage rates have spent just over a week moving back up from the lowest levels in more than three and a half years. Those long-term lows came courtesy of the panic surrounding the coronavirus outbreak, which led investors to move more money into safe havens like bonds. When demand for bonds rises, rates fall, including mortgage rates. The move back up coincides with a steady decrease in the level of panic surrounding the outbreak. Global stock markets have not been shy about reversing coronavirus-related losses, with US stocks actually back to all-time highs. Chinese equities haven't made up nearly as much ground by comparison. And finally, the bond market (which dictates interest rates) isn't anywhere close to its pre-coronavirus levels. All of that having been said, rates are still moving
Categories: Mortgage News

Mortgage Rates May Be Pressured Higher As Virus Fears Ebb

Tue, 02/11/2020 - 16:49
Mortgage rates were very slightly higher today after being modestly lower over the weekend, but in general, remain very close to the lowest levels in more than 3 years. They weren't too much higher than current levels even before the coronavirus outbreak took center stage, but the virus definitely deserves credit for the extra downward momentum in recent weeks. Given that Chinese equities markets are already indicating the financial market psyche has shifted, it may only be a matter of time before US bond markets (which dictate mortgage rates) follow suit. That's not to say that bonds must follow stocks. If that were the case, we wouldn't see bond yields close to all-time lows while stocks are at all-time highs. Rather, it's simply a comment on the fact that Chinese equities serve as a good
Categories: Mortgage News

Mortgage Rates Surprisingly Resilient After Jobs Report

Fri, 02/07/2020 - 17:39
Mortgage rates completely defied the odds. They even defied convention. Specifically, they managed to move appreciably lower even though today's big jobs report basically told them not to. This is a big deal for several reasons. The jobs report is historically the most important economic report on any given month as far as interest rates are concerned. Granted, it's had a bit less impact than normal recently due to the persistently strong readings (i.e. solid job creation is old news), but rates have nonetheless been willing to move in a logical direction when the reports have been much stronger or weaker than normal. So why didn't they do that today? The bottom line is that the US jobs market is not a big risk, nor a big driver of growth for the global economy. China, on the other hand, is
Categories: Mortgage News

Rate Volatility Levels Off Ahead of Jobs Report

Thu, 02/06/2020 - 16:39
Mortgage rates managed to hold steady , for the most part, today. Some lenders were offering slightly better or worse terms compared to yesterday, but none of the changes were very big. This is a welcome development considering the past 2 days saw a rapid increase of 0.125% for the average lender. Sadly, it's not necessarily a guarantee that we're out of the woods with respect to additional increases. While there's no way to predict the future when it comes to financial markets, it is safe to say that rates will face more upward pressure to whatever extent the coronavirus panic dies down. Indeed, that's been at the heart of the past 2 days of rising rates, and before that the burgeoning panic was the primary reason for rates dropping to multi-year lows. Of course coronavirus isn't the only
Categories: Mortgage News

Mortgage Rates Finally Bounce Higher

Tue, 02/04/2020 - 18:27
Mortgage rates have been on a tear recently. The average lender has either held rates steady or improved them every single day since January 16th. Some of those improvements have been substantial, ultimately resulting in the lowest rates in more than 3 years as of the past 2 business days. Today, however, finally brought an end to the winning streak with the first meaningful move back in the other direction. "Meaningful" may not be too meaningful depending upon how closely you're following rate movements. The average lender is still easily able to offer conventional 30yr fixed rates of 3.5% on top tier scenarios. The bigger issue is merely the risk that today marks some sort of turning point in the bigger picture. It's too soon to know if that's what this is, but it's definitely the first obvious
Categories: Mortgage News

Mortgage Rates Digging Deeper Into Multi-Year Lows

Mon, 02/03/2020 - 18:28
In the world of interest rates, it's good to be a mortgage today . The dominant species on that world is US Treasuries: the quintessential dollar-based loans (after all, they are loans to the US government). Loaning dollars to the entity responsible for the dollar is about as foundational as it gets, but I digress. Treasuries and mortgage rates tend to move in the same direction and by generally similar amounts. That's because mortgage rates are based on underlying bonds (mortgage-backed securities or "MBS") that are fairly similar to Treasuries in most of the ways investors care about. The prices of MBS dictate where lenders can and should set their interest rates, but ultimately, it's up to the lender. If they're flush with business and want to slow things down, they might set rates a bit
Categories: Mortgage News

Mortgage Rates Officially at New 3 Year Lows

Fri, 01/31/2020 - 18:42
Mortgage rates inched even lower today as the market resumed efforts to react to and account for risks surrounding the coronavirus outbreak. Weaker economic data also played a part. That said, it's good to remember that the market's coronavirus reaction is all about the global economy in the first place. A massive epidemic is assumed to take a toll on the economy and slower economic growth helps rates and hurts stocks. Today was somewhat special because the average conventional 30yr fixed mortgage rate officially hit the lowest levels since the middle of 2016. This was more a factor of how low they already were yesterday. While today's bond market improvement was fairly substantial it didn't translate to a huge change from most mortgage lenders. Loan Originator Perspective Bond markets recouped
Categories: Mortgage News

Mortgage Rates Basically at Best Levels Since 2016

Thu, 01/30/2020 - 17:15
Mortgage rates improved again today as the market continued to react to updates on the coronavirus outbreak. For top tier scenarios, the average lender is now offering rates not seen since 2016, with the slight exception of a few hours during the beginning of September 2019. Even then, today's rates at least match Sept 2019's rates on average. In other words, today is tied for the lowest levels in more than 3 years. To reiterate yesterday's message: the persistent availability of such low rates depends on a few factors. The biggest among those at the moment is the evolution of the coronavirus outbreak. It's definitely been responsible for the quick bump toward this week's low levels, but the trade-off is that rates should experience quick upward pressure as soon as epidemiologists can confirm
Categories: Mortgage News

Lowest Rates Since September 2019 (Almost 2016)

Wed, 01/29/2020 - 17:07
Mortgage rates regained their footing today, moving back to long-term lows after pausing to move slightly higher yesterday. The definition of "long-term" depends on the lender in question. Most lenders were offering just slightly better terms in September 2019, but only for a few days. For several other lenders, you'd have to go back to September 2016 to see anything lower. Either way, we're talking about the best rates in a long time and a range that's better defined as "mid 3's" than the previously applicable "sub 4%." Today's improvement coincided with a policy announcement and press conference from the Fed. These events are widely regarded as capable of motivating big changes in rates, but that's not exactly what's going on here. In the current case, it's just as accurate to say that rates
Categories: Mortgage News

Mortgage Rates Edge Higher From Long-Term Lows

Tue, 01/28/2020 - 17:18
Mortgage rates were steady to slightly higher today, leaving the average lender just a hair above the lowest rates in months, and still very close to the lowest rates in more than 3 years. The coronavirus outbreak is still a relevant consideration for financial markets, including interest rates, but traders took today to consolidate their recent positions. In other words, the recently prevailing trends experienced a bit of a correction. Stocks rose moderately after falling sharply over the past 2 days. Treasury yields did the same. Mortgage rates moved a bit higher in some cases, but because they're not directly tied to Treasuries, they fared better by comparison. The trade-off was that mortgage rates didn't fall as much as Treasury yields over the past 2 business days. If the virus situation
Categories: Mortgage News

Mortgage Rates Tiptoe Near Multi-Year Lows

Mon, 01/27/2020 - 17:58
Mortgage rates continued lower to start the week as Wuhan Virus continues to be diagnosed at an exponential rate. As we discussed last week, interest rates in general should continue to take cues from the spread of the virus. Why are rates being driven by something that doesn't seem to be at all related to rates? Simply put, the global financial market is accounting for the impact that a potential epidemic disease could have on the global economy. A weaker economy generally promotes lower stock prices and lower bond yields (aka rates). This raises risks and opportunities for prospective mortgage borrowers. If the virus situation continues to get worse before it gets better, rates could certainly go even lower. That's impressive considering the average lender is very close to their lowest rate
Categories: Mortgage News

Mortgage Rates Drop to 4.5-Month Lows on Virus Fears

Fri, 01/24/2020 - 18:05
Mortgage rates moved meaningfully lower over the past 2 days as panic over the coronavirus outbreak continues affecting financial markets. If this epidemic ends up being similar to SARS in 2003, it ultimately won't be worth as much of a drop in interest rates as we've seen so far. But the thing about brand new strains of deadly viruses is that neither the market nor the medical community knows exactly how this will unfold. Until that picture becomes clearer, the market is preparing for more dire outcomes. For whatever it's worth, the timeline of the SARS outbreak spanned 2 calendar years (2002 - 2004) but the most notable market impact was confined to the space of a single month (March 2003). We'll be a week into February before the current epidemic reaches a similar milestone. I'm basing that
Categories: Mortgage News

Mortgage Rates Back to 3-Month Lows

Tue, 01/21/2020 - 17:21
Mortgage rates dropped to begin the holiday-shortened week as markets expressed a bit of panic over the coronavirus outbreak in China. This is similar to the SARS outbreak in 2003, which certainly had an impact on both stocks and bonds. While it's too soon to know if the new iteration of the disease will run a similar course, it's not too soon for markets to begin heading in that direction preemptively. Specifically, fears surrounding the outbreak lead investors to expect commerce, in general, to take a hit. Sure, the average person may not change their daily routine because of Coronavirus, but many will (and have). A decrease in the level of commerce implies lower stock prices. Simultaneously, investors can seek safe havens for their money in the sovereign bond market (such as US Treasuries
Categories: Mortgage News

Mortgage Rates Off Recent Lows

Fri, 01/17/2020 - 19:15
Mortgage rates moved slightly higher over the past two days as strong economic data and corporate earnings coaxed investors into riskier assets like stocks. Bonds (which dictate interest rates) are always being bought and sold, but demand varies depending on investors' risk appetite. If demand for bonds falls as it has in the 2nd half of this week, rates move higher. Fortunately, this move has been very small in the bigger picture. Mortgage rates, specifically, have moved even less than rates associated with other bonds. The average lender is still able to offer 30yr fixed rates of well under 4% on top tier scenarios. And the average borrower wouldn't see more than 0.00125% of difference from the lowest rates in more than 3 months. Bottom line, while rates are slightly higher than their best
Categories: Mortgage News

Mortgage Rate Volatility Still a No-Show For 2020

Wed, 01/15/2020 - 14:53
Mortgage rates improved modestly today, adding to yesterday's slightly less compelling improvement. Taken together, they keep an air of calm and steady progress intact during a week that ran the risk of stumbling across volatility. One of the key sources of potential volatility was today's signing of the US/China "phase 1" trade deal. Granted, it was only much of a risk in the event that something unexpected happened. Needless to say, nothing unexpected happened! Mortgage rates and the underlying bond market reacted accordingly as they merely went about their business for reasons known only to the traders pushing the buttons behind the scenes (i.e. market movement was so well contained today that we're not able to connect any underlying events with the movement). All of the above having been
Categories: Mortgage News

Mortgage Rates Face More Volatility Later This Week

Mon, 01/13/2020 - 18:04
Mortgage rates didn't do much today, and that's good enough news considering the average lender is closer to the lower end of the rate range since early October. The only counterpoint would be that there isn't much distance between the highs and the lows during that time (not a bad thing, just a bit of context). In other words, rates are "pretty close" to the lowest levels of the past several months, but they're also not too far from the highest levels. Rates move when the underlying bond market moves, and it's not uncommon to see a slow start on Monday's that lack meaningful data or headline developments (like today). Potential volatility will be increasing from here, however, with several important economic reports by Thursday morning along with the signing of the US/China phase 1 trade deal
Categories: Mortgage News

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