For the first time since late January, Best-Execution Mortgages Rates moved back to 4.0%.  Over the past month, the rate averaged 3.875% despite plenty of fluctuations in terms of closing costs.  Friday's weakness brought the average of the lenders we survey as close to the 4.0% mark and today's weakness in the bond markets resulted in more lenders offering 4.0% as a best-execution rate, although 3.875% remains at a few of the more aggressively-priced lenders. 

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

Last week, we discussed Monday's upcoming meeting and vote on the Greek bailout as a potential high-risk event for mortgage rates.  Indeed there was never much of a chance that this would NOT be the key market mover to start the current week, although the questions remained as to the direction of that movement. 

Now that we're confronted with higher rates to begin the week, the question becomes whether or not this will prove to be a brief foray into 4.0% best-execution territory or not.  The next few days could be informative in that regard as they naturally provide a venue for ongoing reactions to the Greek bailout as well as Treasury auctions.  The latter can speak to the impact of the Greek bailout on the demand for US Debt. 

We've already seen today's 2yr Treasury auction garner somewhat less healthy demand than usual, and at slightly higher than expected rates.  But 2yr Treasury auctions are of limited importance to the MBS ("mortgage-backed-securities") that most directly influence mortgage rates.  Tomorrow's 5yr Note Auction will be more informative in that regard, but the overriding theme continues to be the evolving situation in Europe. 

Other than unexpected, unscheduled headlines, the next major event on the calendar for the Greek bailout will be the determination of their private sector involvement, set to begin March 8th.  Yesterday's meeting already decided the percentage of the losses that Greek bondholders would be forced to take if they participate and March 8th is the date that participation can begin.  While we could certainly see plenty of volatility in rates between now and then, we could see even more after these so-called "swaps" begin.  The fact that the Employment Situation Report (the most important piece of domestic economic data each month and a notorious mover of mortgage rates) prints during the Greek private-sector swap process merely compounds the issue.

Today's BEST-EXECUTION Rates

• 30YR FIXED -  4.0% more prevalent.  Some 3.875%'s remain
  
• 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).