Mortgage rates moved slightly lower today reaching their best levels since early in the month after a speech from Fed President Bernanke in Jackson Hole.  We'd note, however, that the improvements in rates weren't a result of anything in the speech per se.  Rather, the speech represented an unknown for markets--one which they were waiting on before making their next move. 

After it became clear that there were no surprises from Bernanke, bond market investors steadily bought lots of Treasuries and MBS (The Mortgage-Backed-Securities that most directly influence mortgage rates) filling required trading positions to close out the month of August.  Unfortunately, the improvements in bond markets didn't arrive early enough in the day to be of benefit to mortgage rates as much as they otherwise might have been.  Rates improved, but only moderately so, leaving Best-Execution for 30yr Fixed Conventional loans at 3.5% with the same isolated instances of 3.375% that we've seen on some of the better days of late.

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

It continues to be the case that, in terms of market events, today's speech from Bernanke was small potatoes compared to what lies ahead in the first two weeks of September.  It could be the case that bond markets perform naturally weaker on Tuesday without the strong supportive presence of "month-end."  However, that consideration is balanced out somewhat by the fact that the underlying markets improved today to a greater extent than rate sheets themselves.  All in all, the recent theme of being in a sideways holding pattern ahead of the big-ticket events of early September continues to play out.

Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty.  The long-term direction of rates has been down, down, down, for the past year.  At some point, this will turn, and when it does, we highly recommend that you're prepared by drawing your OWN line in the sand as to how much rates would have to rise before you lock at a lost.  That's assuming you don't simply lock as soon as you're able.  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 and uncertainty to all-time highs.  This also favors locking.

Loan Originator Perspectives

Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage

Rates should be lower today given the day's MBS gains. We're still holding out for some rate improvements here on the West Coast then will continue this week's locking theme I've been discussing all week. That said, many borrowers are unavailable due to holiday travel and it looks like next week will start mildly in the U.S. and Eurozone sentiment is rather dark right now (good for rates). So floating rates into Tuesday looks reasonably safe.

Today's BEST-EXECUTION Rates 

• 30YR FIXED -  3.5%
  
• 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
• 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).