Current Mortgage Rates

Mortgage rates trended down this week as comments by Federal Reserve Chairman Jerome Powell and the minutes from the Fed's November meeting suggest that the Fed may adopt a more neutral strategy on rates sooner than expected.  While most experts still anticipate the Fed to increase Federal Funds rate from its current target range of 2.000% to 2.250% at its December meeting, expectations for fewer rate hikes in 2019 had a positive impact on the mortgage market as well as the stock market.

The Fed has increased interest rates three times this year as it implements a more aggressive rate strategy in response to a strong economy and labor market.  At its September meeting, the Fed made the decision to remove language from its meeting statement that described its policy as "accommodative" in a sign that it is shifting monetary policy into a more restrictive mode to prevent the economy from overheating.  Although the Fed held rates steady at its November meeting, bullish comments from Chairman Powell and other a board members suggested that the Fed was a long way off from a neutral rate strategy which roiled markets and caused mortgage rates to rise.

Supporting the Fed's messaging, Q3 GDP growth of 3.5% exceeded expectations as healthy consumer spending offset slowing business investment.  Additionally, the unemployment rate remains near a fifty year low while job and wage growth continues to accelerate.

Sluggish business investment, a stalling housing market and the early signs of a global economic slowdown may have caught the Fed's attention as Powell offered a decidedly more measured outlook on interest rates in his more recent commentary.  The market responded positively to Powell's comments and expectations for three rate increases in 2019 have moved closer to one.  Mortgage rates for several key programs dipped on the news while other programs remained flat. 

The interest rate for a 30 year fixed rate mortgage decreased 0.125% to 4.625% while the rate for a 15 year fixed rate mortgage slid to 4.000%.  FHA mortgage rates and VA mortgage rates remained steady at 4.250%, with both programs appealing to borrowers focused on low or no down payment programs, especially first-time home buyers.  The interest rate on a 5/1 adjustable rate mortgage (ARM) stayed put at 4.000%.  Jumbo mortgage rates were flat at 4.625%, consistent with conforming loan rates.  Non-owner occupied mortgage rates stayed at 5.000%.   

Most signs -- including perhaps most important, the Fed's actions, statements and commentary -- point to higher rates in December but the forecast for next year is becoming less predictable and potentially more favorable for borrowers.  Ongoing equity market volatility, global economic concerns and a dip in oil prices may have a positive effect on mortgage rates, as we experienced this week.

We expect market fluctuations to continue and while interest rates are impossible to predict, prospective borrowers looking to buy a home or refinance should take advantage of any market pullbacks or plateaus and lock in a lower rate.  As lenders react differently to dynamic market conditions, we have also seen a wider variation in mortgage rate pricing, which means borrowers benefit more by shopping multiple lenders.

Because rates change constantly, we continue to actively monitor the mortgage market for new developments.  Borrowers should check the FREEandCLEAR rate tables regularly to review personalized, updated mortgage rates for lenders in their area.  Our rate tables are free to use and require no personal information.