Mortgage Rates - April 16th, 2019

Mortgage Rates Are Moving Higher - For Now:

Who remembers the the mortgage rate euphoria in late March 2019? 
Mortgage rates were moving down and news outlets were claiming this was only the start; that even lower mortgage rates were on the way: The only problem is; even lower mortgage rates never happened.
Any Loan Officer with knowledge of how the industry works and 10+ years of experience would have told you this simple truth: Ignore those saying mortgage rates will keep going down and/or those saying low rates will continue for a long time.

I'm a Loan Officer with over 14 years of experience; I know what consumer mortgage rates are based on (It's not the 10y treasury yield) and my company offers some of the lowest California mortgage rates for both refinance and purchase transactions. 

During the last few weeks of March I was telling everyone and anyone who would listen - lock in your rate if it makes financial sense. The worst thing a homeowner or homebuyer can do is think rates will keep "tanking" (to use CNBC's description) after they made one of the biggest moves down in ten years.

It simply doesn't work like that in the mortgage industry. The easiest way to understand mortgage rates and when they are trending lower is this; two steps forward and 1.75 steps back. 

Mortgage rates rarely move down by more than a .125% and not snap back. So the next time you see home loan rates decrease by .125% or more and you've been waiting to lock in terms - move to lock in terms asap. That leads us to this; will there be a next time and if so when will that happen?

Mortgage Rates Moving Forward:

Predicting mortgage rates is super difficult at best. Why? There are so many moving parts that influence mortgage rates it's next to impossible to say what exactly mortgage rates will do in a specific time frame.

What we can do is make an educated guess and recognize what may prove that educated guess to be wrong.

Will we see home loan rates return to levels seen towards the end of March/the first few days of April 2019? I believe there is a good chance that will happen however we'll have to be patient. Here are the reasons why I believe we'll revisit those mortgage rate lows:

  • The Fed - When mortgage rates and general interest rates were moving up late summer/early Fall 2018 signs of an economic slowdown started to appear. When mortgage rates topped 5.00% for some mortgage companies loan application volume dropped dramatically. Based on the Fed's most recent statement I believe they are very aware that the economy can not handle interest rates at the level seen six months ago and they have already announced certain actions which are favorable to keeping home loan rates low.

  • The Economy - We are going on nearly ten years since our last recession. The economy is in last stages of this current expansion and signs of a slow down are starting to appear.

As we move towards the end of April it would not be surprising to see mortgage rates level out and establish a new range (similar to what happened late January). However there is no guarantee that will happen and as I suggest to all my clients: if current mortgage rates make financial sense then do no hesitate to lock in terms and close your loan.