Mortgages Rates are higher for the 2nd day in a row.  Unlike the movement we normally see, which limits itself to affecting closing costs as opposed to the quoted rates themselves, today's deterioration leaves 4.0% looking like the better deal for enough lenders that we'd make a note of it's increasing prevalence, although the average across all lenders in our survey is still closer to 3.875%.

Additional reading: A previous post with more detailed discussion about Best-Execution calculations.

Weakness aside, today was fairly quiet for the MBS market (MBS = mortgage-backed securities, which most directly influence the rates offered by mortgage lenders) as well as Treasuries.  Most of the activity was seen in the early morning after the European Central Bank said that it might allow the central banks from various Euro countries to write-down their Greek holdings, effectively improving Greece's chances of getting their 2nd bailout approved on Monday.

Events and headlines surrounding this bailout have been the market's focus for a few weeks now, overshadowing most domestic economic reports and other traditionally important market movers.  While it's true that we've come to expect negotiations over Greek bailouts to not come without surprises and alterations, markets are still burdened with the need to prepare for the "if's."  In such cases, traditional metaphors apply, such as waiting for shoes to drop or knives to fall.  In short, no one wants to commit too strongly to either side of the spectrum of possibilities.

Because of this, we are left with markets (both capital markets and Mortgage Rate Markets) that are in a sort of neutral position with respect to broader trends.  Take 10yr Treasuries at 2.03% for example.  Since the broader rally began in late summer 2011, this is the mid-point between the absolute highs and lows.  In similar fashion, mortgage rates are on a fence between 3.875% and 4.0% Best-Execution levels.  Because of that, floating over the weekend continues to be a risky proposition considering that rates could just as easily shift into 4.0% territory as they could bounce back down into 3.875%'s.  We don't think that's any more likely to happen than anything else, simply that risks of movement in either direction are elevated.


  • 30YR FIXED -  3.875%, more 4.0% showing up
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.25%
  • 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates and costs continue to operate near all time best levels
  • Current levels have experienced increasing resistance in improving much from here
  • There are technical reasons for that as well as fundamental reasons 
  • Lenders tend to get busier when rates are in this "high 3's" level and can throttle their inbound volume by raising rates or costs.
  • While we don't necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floating
  • But that will always be the case when rates operating near historic lows
  • (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).