Mortgages Rates improved only moderately today despite a stronger bounce back in underlying bond markets.  The Best-Execution Conventional 30yr Fixed Rate remains intact at 4.0%.  That means that the borrowing costs associated with yesterday's rate offerings will be slightly lower Today vs yesterday, but still significantly higher than Monday.  It continues to be the case that more than a few lenders will have issues hitting that 4.0% mark with a "no closing cost" loan after yesterday's sharp rise in rates.  

(read more about Best-Execution calculations).  

Today really reinforces one of the common quips about mortgage rates getting better much slower than they seem to get worse.  You might also hear: "lenders take it away faster than they give it back," or even "mortgage rates take the stairs down and the elevator up."  The bottom line is that such sayings exist for good reason.  Rates really do tend to move much slower when bouncing back from recent weakness.

Today was a good example of this as underlying bond markets including MBS (the "Mortgage-Backed Securities that most directly influence mortgage rates) did exhibit some decent improvements.  Lenders, on the other hand, weren't able to offer rate sheets that were much better than yesterday's.

The key reason is "volatility."  We talked about it in THIS POST a while back. Long story short, volatility increases the cost of doing business for mortgage lenders, and we're still in the midst of volatile market movements even though today's movement was in the right direction for lower rates.

Lenders are also cognizant of potential volatility-inspiring events in the near future.  The 800-lb gorilla in the room is the Employment Situation Report on Friday.  Now that markets have had a chance to react to the FOMC news that sent rates higher yesterday, the last piece of the puzzle in the short term.  Here's what we said about the jobs report last week:

"Betting on lower rates is to hope that the data turns out to be economically worse-than-expected or that a news headline rattles market confidence and drives better demand for fixed income investments like MBS.  Ultimately, Friday's Jobs Report is the "biggie," and will serve to either accelerate or undo some of the progress or deterioration created in the first four days of the week."

In other words, you have to assess whether or not you lock or float based on where you are right now instead of how much you might have lost if you floated yesterday.  The impact of the Jobs report could really take things either way.


  • 30YR FIXED -  4.0%
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.25%-3.375%
  • 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
  • We're currently further away from the very best levels than we have been in recent months
  • We've broken away from a long, stable trend and are expecting greater volatility
  • Rates could easily move higher or lower, but given the above facts, there seems to be more risk than reward regarding floating
  • (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).