Mortgage Rates continued lower today after hitting new all-time lows on Friday's weaker-than-expected Jobs report.  Apart from simply being an extension of Friday's trading patterns, interest rates benefied from ongoing skepticism about the situation in Europe as well as several speeches from Fed governors indicating more potential bond-buying if the economy continues to weaken.  The net effect for mortgage rates was a slight improvement in borrowing costs for the prevailing range of Best-Execution rates between 3.5% and 3.625% for 30yr Fixed Conventional Loans.

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

At this point in economic history, mortgage rates seem to have taken on the task of maintaining a slow-motion free-fall.  In reality, this has less to do with the mortgage market and more to do with the record low interest rates across the board due to the record-high uncertainty about the fate of the global economy.  When investors seek the relative safety of bond markets, prices of securities such as the MBS ("mortgage-backed securities" that most closely affect mortgage rates) rise as demand increases, bringing yields or interest rates down.

Europe and our own domestic economy are the two main considerations keeping downward pressure on rates, and although one of those is more likely to precipitously "blow up" than the other, investors are waiting for both of those things to either HAPPEN or for the risk of them happening to die down significantly before moving out of the safety of bond markets.  It's very much a day-to-day environment with no clear conviction in either direction.  Rates COULD continue to leak lower, but the lower they go, the slower the movement becomes and the greater the risk of loss if a precipitous movement see things swing in the other direction.

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

Bob Van Gilder (BVG), Finance One Mortgage

LOCK/LOCK/LOCK  or not.  Rates remain at, historically, historical Lows!  

Jason York, Vice President of VA Operations at Prime Mortgage Lending, Inc

When will the party end?  Who knows!  Just make sure you are at the party and jumping into the pool when it seems "just right"!  This could all end at any day, with some report or government move.  So don't wait too long to try and grab something that might never be there.  Don't be greedy!

Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage

Like the peaches I've been enjoying here, rates are sweet and tasty, but won't last forever.  There's a temptation to become complacent in markets like this, but whether you want to float or lock, waiting to start the loan process is a gamble no one should be taking.  Whether you're upside down or not, today is the day to investigate refinancing if you haven't already!

Victor Burek at Benchmark Mortgage

If you followed my advice from Friday, you were rewarded this morning with the best rate sheets ever.  I see no reason to lock unless you plan to close within 15 days.

Steve Chizmadia, Mortgage Advisor, American Capital Home Loans

Rates are at all time lows, I don't see room for much improvement from current levels even if the market moves in favor of lower rates.  Many lenders are at capacity and we have already seen lender's reprice worse to slow the flow of new loans coming in when the market is in our favor.  I think the risk of floating is too great for any rewards in improvement that will follow with further market improvements. 

Andy Pada, VP, 1st 2nd Mortgage

I've been silent on the issue of locking interest rates because I am a perennial believer in locking when you are satisfied with your terms.  But it seems that there are so many economic headwinds from here and abroad that there may be a trend of lower interest rates.  Therefore, locking in your rate should be viewed as a day-to-day, and perhaps, hour-to-hour endeavor.  Have constant contact with your mortgage professional and see what the day offers.  In short, BE VIGILANT.

Mike Owens, Partner with HorizonFinancial, Inc.

Lock and move on to the next one.    With re-negotiation options why float honestly.   I'm not and I don't recommend it.   I can't imagine having a floating pipeline when rates do spike.   There will be heads rolling and deals sinking.     



  • 30YR FIXED -  3.5% - 3.625%
  • FHA/VA -3.5% - 3.75%
  • 15 YEAR FIXED -  2.875% - 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).