Hola from El Paso, Texas.

Tension remains high in the primary mortgage market as mortgage rates have extended their losing streak.  We're in a tough spot here...

We expected our float boats to take on some water last week after a much better than expected October Employment Situation Report, but I have to admit, the speed and size of the sell off has been surprising.   The past two sessions have been particularly painful for consumers.

The best conventional/FHA/VA 30 year fixed mortgage rates have risen into the 4.25% to 4.50% range for well-qualified borrowers.  The best conventional/FHA/VA  15 year fixed mortgage rates have risen into a range between 3.500% and 3.875%. I STILL won't endorse an ARM.

Important Mortgage Rate Disclaimer:  Loan originators will only be able to offer these rates on agency conforming loan amounts to borrowers who are have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as:  third party fees +  title charges  + transfer and recordation + escrows (things like upfront MIP (if required), property taxes, homeowners insurance, accrued interest)".

The question everybody wants answered is whether or not this bond market sell off reflects a shift in fundemental outlooks and if it's going to continue.

Politicians and anti-QEII economists alike are getting much media airtime and they are using it to bash the Fed's plan to combat high unemployment and the disinflationary pressures that come along with it. This has led many a main streeter to question the program's effectiveness which, in the process, has put the Fed's credibility at stake and further intensified a bearish technical bias in the bond market. That's our main culprit in my view, the fire alarm has been pulled in an overcrowded movie theater and investors are running for the exits.

We can actually trace this weakness back to some behavior we witnessed leading up to the November 3 FOMC meeting. We're experiencing a "buy the rumor, sell the news" spike in interest rates. The bond market got over-exuberant about QEII and although we enjoyed one day of aggressive mortgage rate rallying immediately following the FOMC meeting, the post-QEII trade has not been consumer friendly. The good news is the "pain trade" playing out is part of the healing process. It balances out the number of buyers and sellers in the bond market, which has been dominated by sellers lately. It allows the bond market to reset itself and start fresh.

MUST READ: Buy the Rumor Sell the News. Bond Market Resets. Pain Trade Plays Out

As mentioned above, this liquidation of long trading positions is a necessary evil in the recovery process. That cleansing process was once again evident today in the bond market and it might continue to play out over the next few days, but once it's washed out, I think we'll at least see 4.25% no cost loans on the board again. When that occurs we'll revisit the notion of mortgage rates moving back below 4.00% again...until then we're stuck in a waiting game...