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S&P, the ratings agency, downgraded Greece's government debt to junk status earlier in the day. This was an unexpected event and resulted in stocks selling off and the bond market rallying. Lower benchmark Treasury yields helped mortgage-backed security prices rally enough to allow lenders to reprice for the better...

Yesterday was the first day in awhile that I advised floating overnight. It paid off today. If you are being offered 4.75% costing 1 discount point, I would lock. If your rate moved lower by 0.125% (in rate, not points), I would consider locking. If your mortgage rate did not move lower today (same as yesterday), it is not likely to rise tomorrow even if MBS prices fall, so it is worth it for you to float overnight. I do think interest rates moved a long way in a short time today, with that in mind I am more nervous about letting these gains stay on the table for long. If this becomes a trend I will be more willing to let improvements ride out a few more days. ...

Reports from fellow mortgage professionals indicate mortgage rates to be similar to yesterday’s. The par 30 year conventional rate mortgage remains in the 5.00% to 5.25% range for well qualified consumers. To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. If you are seeking a 15 year term, you should expect a par rate of 4.375% to 4.50% with similar costs. There are currently two thoughts regarding the recent move higher with mortgage rates. One side is saying that this is the start of higher mortgage rates which will continue into next year as the economy continues to improve. The other side of the argument is the recent move higher isn’t an indication of a trend for rates next year but rather due to very low volume of activity due to market participants being on vacation over the last two weeks of the year. What is your opinion? Do you feel the move higher in rates will continue into next year and the days of rates under 5% are over? Or do you feel once the first team traders come back to work from their Christmas vacations that much of the losses we have suffered will be recaptured and rates will once again move below 5%?...

While benchmark interest rates continue to chop around in a contained range, mortgage-backed securities have moved sideways, failing to make much progress in either direction. Although we have experience a few moments of added volatility, tight trading ranges have kept and generally "topped out" MBS prices have kept mortgage rates stable all week, near six month lows. As previously stated, MBS prices are hitting a ceiling, unable to make enough progress to push mortgage rates any lower. Therefore, if you are still floating, it is time to take advantage of the aggressive rates lenders are currently offering. Eventhough there is room for benchmark Treasury yields to move lower heading into year end, we do not expect MBS prices to benefit from continued gains as the recent strong performance of mortgages has many investors thinking about profit taking....

Despite a rally in equity markets, prices of mortgage-backed securities moved higher yesterday. No economic data was released, trading volume was very thin, however MBS closed at their highest level since early this summer which allowed some lenders to reissue rate sheets with lower consumer borrowing costs. For the last half of the summer and all of September, prices of MBS have been stuck in a range, yesterday was the first time they closed outside of that range (highest prices since May). We must remind that this occurred in a low volume environment. Also, with the third quarter coming to an end, it is expected that market participants will be adding AAA rated assets to their balance sheets, so we are not too excited about the extent to which this rally continues....YET. We will grow more optimistic if the recent breakout holds when the fourth quarter begins on October 1. ...