Looking back at the distribution of lender pricing offerings over the past two weeks, we've been overwhelmed by volatile movements and knee jerk reactions in the primary mortgage market. That volatility eventually gave way to moderately less erratic interest rate behavior late last week.  And now, in the first two days of this week, rate movements are exhibiting a good degree of regularity and today we experienced what amounts to another step toward confirming the completion of the "QEII cleansing process".

That's not to say mortgage rates are not moving, that is not the case.

Mortgage rates have actually been making a corrective run over the past three days. This little bounce has contributed a great deal toward shifting technical momentum in a floatboater friendly direction (from very bearish). And even though we witnessed some weakness in the primary mortgage market late this afternoon, MBS prices have nearly recovered from the sell off that gained steam last Monday, which totally pushed 4.125% quotes underwater. MBS prices today closed  just a touch higher than last week's best levels, and the trading range has been much more stable this week!  This positive progress is especially encouraging to see during a holiday shortened work week because investor attention is generally distracted and the trading environment is illiquid.  This can make it easier for day traders to dominate the directional movements of interest rates.

The chart below of the last few weeks illustrates declining price volatility and the beginnings of an MBS recovery rally.  Remember: the following chart is not mortgage rates but MBS prices.  Thus, the higher the line, the lower the rates (in general). 

As you can see, quite stable compared to 11/17, and at a higher average price.  Besides the underlying positional movements we're watching on our trading screens, this is why we'd consider today one of the best days for confirmation of the QEII cleansing process washing out of the bond market. It's certainly not a closed case and it definitely doesn't mean the rally will extend.  More time is needed to determine if rates are going to dip below 4.25% again, but so far, so good.  If the market continues to display similarly mild volatility and a clearer range is established, longer term outlooks could again come into play with respect to hunting for that ideal mortgage rate.  For now, we're still in an environment where changes could play out quickly. Things are looking better but we'll need confirmation of this move next week and after the Employment Situation Report, which will be released next Friday.  Still in a waiting game....

The best conventional/FHA/VA 30 year fixed mortgage rates remain in the 4.25% to 4.50% range for well-qualified borrowers. 4.25% is looking more attractive on a permament buydown basis but the permanent buydown still takes over 5 years to recover in payment.  The best conventional/FHA/VA  15 year fixed mortgage rates are still in a range between 3.500% and 3.875%.

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.

SHORT TERMERS BEWARE: If MBS prices move lower tomorrow, loan pricing will take a bigger hit than usual because most lenders decided not to reprice for the worse this afternoon when MBS fell from recent price highs.