Mortgage Rates made an abrupt move higher today, leaving most lenders at their worst levels since early June.  Recent momentum has carried rates in a weaker direction despite a relative lack of impetus from underlying market events.  At first, this could be chalked up to low volume volatility, but volume surged today (yesterday too, to a smaller extent), and securities in rates markets hit levels not seen in months.  All told, it was enough to move the Best-Execution rate decisively up to 3.625%. 

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

This means that depending on your starting point in observing mortgage rates, you're definitely up at least an eighth of a point from any time in the last few weeks and in some cases, a quarter of a point.  Yesterday we questioned whether or not a certain measure of market resilience was a potential sign of a bounce back or if it was just another fluctuation in a trend that keeps pointing to higher rates. 

Clearly, the trend toward higher rates continued today and has stampeded through each instance of "potential resilience" in the past two weeks.  As to whether or not it continues, it doesn't make sense to try to predict where this market is going.  If we look at the economic fundamentals, we can make a case  that we should bounce back to slightly lower rates, but markets have traded with zero regard for those fundamentals on the way up to current rates.  Best bet is to assume recent trends are intact until proven otherwise.

Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty.  For those with lower levels of risk tolerance who would consider movements in cost (despite unchanged interest rates) to be significant, or for those within 15 days of closing, or who are purchasing, this certainly favors locking.  We'd also consider that rates remain very close to all-time lows.

Loan Originator Perspectives

Constantine Floropoulos, Quontic Bank

We have been consistent in locking all loans at origination. For clients who did not take heed to our advice, they are experiencing what we warned. The market giveth slowly, and taketh quickly. The likelihood of recovering any losses over the last 3 weeks in the next 7-10 days is almost completely improbable, 15-30 days may see a 50% recovery. The risk now is that things get uglier....which is the trend. With all the indications that the party may be paused for now, we advise to lock on the next up day (up in MBS price, down in US 10 year tsy yield). Locking today is a losers game. We will see some short rally in between the selling, even if it is simply the short sellers covering positions and taking their profits. Closing in the next 2 weeks, you should lock on the next "up" day, 15-30 days has a bit more wiggle room to risk, 30-60 days even more so.

Mike Owens, Partner with HorizonFinancial, Inc.

Been locking knowing this was coming. Floating has never made sense to me. If you were advised to float, well then what confidence can you really have in your advisor/loan officer. Lock before it gets worse.


  • 30YR FIXED -  3.625%
  • FHA/VA - 3.5% (varies more between lenders than conventional 30yr Fixed)
  • 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).