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While price action has been volatile so far this morning, MBS continue to hold in the middle of the recent trading range. Because the Employment report was friendly to the fixed income sector, I am switching my outlook from lock to float. However, because we are seeing better rates this morning, there is nothing wrong with locking today to take advantage of overnight and morning improvements. ...

Mortgage rates ticked higher yesterday as prices of mortgage backed securities were pressured lower by a selloff in the long end of the Treasury yield curve. To remind readers, as prices of MBS and Treasuries fall, their yields or rate increase…price and yield have an inverse relationship. No major report or headline caused the moved lower, AQ and MG point out that it was a function of Friday's bond market rally being unwound before today's Treasury auction announcement and the FOMC meeting which was ignited by a "Build America Bond" issuance pricing in California. Their brains are complicated but we make a good team! Whatever the reason was, price losses held into the close and the majority of lenders repriced for the worse. Reports from fellow mortgage professionals indicate that mortgage rates have moved higher this morning. The par 30 year conventional rate mortgage is now in the 4.875% to 5.125% range for well qualified consumers. To secure a par 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 one point loan origination/discount/broker fee. You can elect to pay less upfront fees but your interest rate will be higher....

Last week ended on positive note for mortgage backed securities and mortgage rates. As stock indexes fell, market participants re-allocated portfolios from risky assets to safer investments, resulting in added demand for government AAA rated fixed income securities. The benchmark 10 yr Treasury note moved back under 3.40% and MBS closed near their best levels in the past few weeks. Most lenders repriced for the better. Following the release of today’s data, MBS have moved off their recent price highs but continue to hold near the high side of current trading range which I have used to recommend locking or floating. Considering MBS prices are still close to recent highs it makes more sense to lock rather than float, so I would advise anyone closing within the next week to go ahead and lock to remove all chances of a spike higher in mortgage rates....

Mortgage rates fell a few basis points yesterday as benchmark Treasury yields moved lower in the range. The extended rally in the rates market helped MBS prices tick higher which eventually resulted in lenders repricing for the better. An above average turnout at the 5yr note auction combined with an unexpected drop in New Home Sales helped spark the move lower in yields . To remind readers, as prices of MBS move higher, lenders are able to pass along lower mortgage rates. ...

Mortgage rates were pushed higher yesterday after benchmark Treasury yields moved higher, outside the well defined range that has kept rates relatively stable since August. New supply of Treasury debt combined with several psychological factors pressured MBS prices lower and forced lenders to reprice for the worse. Despite this move lower, we are not yet convinced this a long term move outside the range. The market is still very nervous about a stock sell off and another dip lower in the recession. This will likely keep demand for AAA rates Treasury debt high, which would foster a steady interest rate environment....

Reports from fellow mortgage professionals indicate lender rate sheets are similar to what we had yesterday morning. The par rate for a conventional 30 year fixed rate mortgage remains in the 4.875% to 5.125% 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. As always, you can elect to pay less in fees and secure a higher interest rate or pay additional fees to buy a lower rate....

Reports from fellow mortgage professionals indicate that lender rate sheets are slightly worse today. The par 30 year conventional fixed mortgage rate remains in the 4.75% to 5.00% 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 with an estimated one point loan origination/discount/broker fee. If you are seeking a 15 year term, you should expect a par interest rate between 4.25% to 4.50% with similar costs. Because rates are not far from recent five month lows, there is more to lose from floating than to gain, so I am still advising my clients to lock in their rates....

Last week consumers who were floating loans watched mortgage rates rise almost 0.25%. After touching five month lows in the previous week, better than expected economic data and corporate earnings reports pressured prices of mortgage backed securities lower which resulted in lender's raising the par 30 year mortgage rate to 4.875% (at best) . To remind readers, as MBS prices move lower, lenders offer higher mortgage rates. The biggest concern for higher mortgage rates in the week ahead is largely a function of the communications from the Federal Reserve. Unless the Fed openly implies they will begin raising short term interest rates in the near future, which would be a factor of an improving labor market or increased inflationary pressures, we expect mortgage rates to remain near current levels in the week ahead. ...