Mortgage Rates moved slightly lower today but it was enough to officially hit new all-time lows.  Some perspective is in order though.  Certain lenders' rates are unchanged on the day, and some are even slightly higher, but the average moved lower.  Even then, the actual INTEREST RATE would be the same as it was yesterday.  The improvements from yesterday were seen in the form of lower borrowing costs for those same rates.  Bottom line: Best-Execution remained at 3.625%, but just got a bit more affordable. 

(Read More:What is A Best-Execution Mortgage Rate?)

Today's economic data at home was a non-event, and the European considerations that helped push rates lower this morning were largely known and accounted for by the time domestic markets started trading today.  Bond markets improved in the first few hours of the morning and have since been trading in ranges that are so narrow and so sideways that it borders on ridiculous.  

With nothing spectacular coming out of today's EU Summit, there's one more day left for European headlines to motivate rates away from their recent trend of narrow historic lows.  We're always cautious about being optimistic about the FUTURE direction of rates, not only because that can't be predicted with certainty, but also because we're not eager to sway anyone's locking/floating preferences.  We'd rather lay out the relevant considerations and help guide our audience toward their own conclusions based on their unique scenario.

Obviously, no two scenarios are exactly the same.  That said, we're feeling less and less like rates are cutting this narrow, converging path because they're ready to break quickly to one direction or another and more like rates are just really low, really sideways, and will take a lot of convincing before doing something else.  Granted, we COULD see a big move in one direction, but probably not the other.

 Simply put, rates just cannot drop quickly from current levels!  There are structural roadblocks in the Secondary Mortgage Market to such things.  Because of that, and because there continue to be risks ahead, we continue to think that risk outweighs reward with regard to floating, but readily acknowledge that we're not on the edge of our seats waiting for rates to break wildly higher (though we'd probably stand up and take note if it looked like such a thing was actually happening).  

Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty.  While it's a reasonably safe assumption that European concerns will generally help rates stay lower than they otherwise would be, that "otherwise would be" part is very much a moving target.  Best bet is to focus on the fact that rates are at their all time lows, and can change quickly based on events that aren't "scheduled" or able to be forecast.  Risk vs reward for floating vs locking looks a bit larger than we'd like, but not out of the question for those who understand the risks and have an exit strategy if things don't go their way.

Loan Originator Perspectives

Mike Owens, Partner with HorizonFinancial, Inc.

Lock your rate and be happy that you are getting the lowest rate mortgage on record. Floating just isn't worth the worry over an 1/8 of a point here or there. It's better to have locked if rates are down than to have floated if rates are up. More to lose than gain. Consider a 20 or 15 year loan as well.

Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage

Like the least wormy apple in an orchard, US bonds and mortgage securities continue to improve by default.  Eurozone is a looming disaster, and US equity outlook is far from certain.  Bonds and mortgages win by default.  Can lock or float at these levels depending on risk tolerance and time until closing, but be aware that the longer we are range bound (as we’ve been for better part of a month), the greater the intensity when pricing breaks one way or the other.

Bob Van Gilder, Finance One Mortgage

How low can they go? Beats me. Just take advantage of what's available and should it get better--- (4-6months down the road) your Originator (if he/she is any good) will take care of you. If not, I'll be calling!

Victor Burek at Benchmark Mortgage

I continue to advise my clients to float til within 15 days of closing. That strategy has been quite successful for the last couple months; however, we do have a high risk event tomorrow with the EU summit. If they pull some kind of rabbit out of their hat, the market could get very happy and drive rates higher.


  • 30YR FIXED -  3.625%
  • FHA/VA -3.5% - 3.75%
  • 15 YEAR FIXED -  3.00%
  • 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).