Mortgage Rates improved moderately today as European turmoil continues to benefit domestic interest rates.  Yesterday's late news of a $2 bln trading loss at JP Morgan also contributed to the overnight gains in broader bond markets, but it has been lingering uncertainty about the European situation that allows rates markets to hold steady at lower levels.   Many lenders are back in line with some of their lowest rate sheets ever, though none are noticeably better.

The Conventional 30yr Fixed Best-Execution Rate is well-established at 3.875% (read more about Best-Execution calculations), and some of the most aggressive lenders in the marketplace may be able to offer competitive scenarios at 3.75% for the most ideally situated borrowers.  That said, there will continue to be diminishing returns for buying rates down under 3.875% until things change in the Secondary Mortgage Market.

A very telling time is upon us.  We see two diametrically opposed forces pushing and pulling on mortgage rates here at these key levels.  We've explained the underlying structural constraints in the Secondary Mortgage Market that are largely responsible for lenders' rates getting so sticky at 3.875% Best-Execution (in other words, the whole "hard to get much lower than this" phenomenon), though we've also said it CAN happen given enough time and motivation.

Now the question becomes: WILL IT HAPPEN due to the less-than-ideal motivation of "European Turmoil?"  We'd feel a whole lot better about hoping for lower rates if we were in an environment where the underlying motivation is stable and long-lasting.  But because we've seen big, fast, unexpected market shifts courtesy of European headlines, we have a hard time banking on the longevity of that situation.

Investors in the secondary mortgage market have demonstrated that they tend to feel the same way, having clearly avoided a quick move down into uncharted territory with respect to the "buckets" on the secondary mortgage market.  Read more about "buckets" HERE.  Without a more stable motivation for low interest rates, we'd expect ongoing progress in creating a market for even lower rates to continue to be slow and small.  

Loan Originator Perspective

Jason Zimmer, President, Parlay Mortgage & Property

With rates as low as they currently are, I have been advising all clients to lock if they plan on closing their loan within the next 60 days. The cost to lock for the extra 30 days is definitely worth it to secure these extremely low rates.

Ted Rood, Senior Mortgage Consultant, Wintrust

It's all about Europe, and the band aids being applied daily. No resolution anytime soon, no stock market rally pending, hence no dramatic rate changes for the near future.  That said, I'd rather have one in the hand than two in the bush!  Rates are awesome... Take the money and run!

Kent Mikkola, M&M Mortgage

One thing to ask is if the lender has a float down or renegotiation policy.  If they do, there is absolutely no reason to float you loan currently. 


  • 30YR FIXED -  3.875%
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.125-3.25%
  • 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
  • Rates could easily move higher or lower, but given the nearness to all time lows, there's generally more risk than reward regarding floating
  • But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.
  • (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).