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Lender rate sheets were slightly worse than yesterday but nothing monumental. The best par 30 year fixed -conventional, FHA and VA- mortgage rate remain in the 4.25% to 4.50% range with several lenders offering 4.125%. 15 year fixed rate loans also remain in the 3.75% to 4.00% range. ...

Mortgage rates rallied to new all-time lows yesterday following a few disappointing housing headlines. While it has been no secret to housing industry professionals, the post-homebuyer tax credit hangover appears to have caught some folks on Wall Street off-guard. Stocks sold off, interest rates rallied and lender rate sheets were the most aggressive we've ever seen them. I locked all the loans in my pipeline. Did the consumer borrowing cost rally extend another day?...

Stocks rallied all day long before closing at the highs of the session. This resulted in another investor exodus from risk averse assets which sent benchmark debt yields higher and drove mortgage-backed security prices lower....and lower...and lower. Lenders repriced for the worse and mortgage borrowing costs took one on the chin. MBS prices are now well-below recently hit record highs. ...

Even though economic data was WORSE THAN EXPECTED this morning, which usually benefits the fixed income sector and mortgages, interest rates continue to take their directional guidance from stocks. Specifically, when stocks rise, mortgage rates rise. When stocks fall, mortgage rates fall. Well stocks rallied big time today, lenders repriced for the worse, and mortgage rates rose for the second day in a row....

With rates at the best levels of the year, I continue to advise locking all loans closing within 30 days and also encourage you to consider longer term locks if your loan is closing beyond 30 days. Stocks have been the primary influence over mortgage rates lately, if stocks rally, mortgage rates will rise. On the other hand, if stocks sell off, lenders have proven they are unwilling to push mortgage rates lower than current levels. With that in mind I do not see enough reward to justify floating in this environment. ...

The Department of Treasury announced the terms of next week’s debt offering. They will sell $44 billion 2 year notes, $42 billion 5 year notes, $32 billion 7 year notes, and $11billion 5 year TIPS notes for a total of $129 billion. All auctions amounts were as expected with exception of the 5 year TIPS offering, that was $1bn larger than the previous auction. The added supply of debt on the market pressured both treasury and mortgage yields higher. The Treasury rally that helped mortgage rates recover from the previous day's marginal weakness reversed course today. Once again we have taken one step forward only to immediately take one step back. ...

I continue to favor floating one day at a time. Lenders are being very slow to pass along the price gains we have enjoyed over the last couple days. Purchase loans must be viewed differently since they must close on a specific date while a refinance can always be delayed. So for my personal clients, I am much more conservative with purchase loans than I am when clients are refinancing. If you are buying a new home, you might want to take advantage of the recent drop in rates, but I am definitely not against floating. ...

Yesterday was either the beginning of rates moving higher or just a temporary correction. If your lender is still offering the same rate they were offering two days ago, lock! If the cost of borrowing has risen, which is the likely case, I think you should cautiously float at this point. The damage has been done and there is no need to panic just yet. We think the 10 year yield and MBS prices have some room to weaken before turning around. If a recovery rally does occur, I will continue to cautiously float until the rebound rally loses momentum. Lock at the price highs, float at the price lows has worked all year. Considering this spike in mortgage rates was not a function of the Fed's MBS Purchase Program coming to an end, I think it makes sense to give our long-standing strategy a chance to play out before locking. ...