Mortgage rates moved noticeably higher today after a better-than-expected report on private payrolls suggested that tomorrow's all-important Employment Situation Report could be similarly stronger.  Other factors contributed to today's rise in rates including an important announcement from Europe's Central Bank, The ECB.  Despite the fact that today's move higher was a bit faster-paced than recent moves, it was still not enough to change the prevailing best-execution rate of 3.5% for Conventional 30yr Fixed loans.

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

Given the fact that we still have access to yesterday's Best-Execution rates, yesterday's advice bears repeating, even if it's slightly less applicable after today's weakness:

In addition to the Guarantee Fee considerations discussed yesterday (read more...), the fact that we've held onto recently low rates and that the week's most anticipated events begin tomorrow morning, mean that it continues to be a good strategic opportunity to lock.  This says nothing about which direction markets could move.  Indeed, things could go either way, but from a risk/reward standpoint, locking looks better than floating, especially if you missed out on late July/early August rates.

We also noted yesterday that the ECB news wasn't looking like it would be as big of an event as it once was due to the critical information already having made its way to markets ahead of time.  The dark horse turned out to be the ADP private payrolls numbers which many view as broadly informative for the more important national employment report tomorrow.  When job creation is stronger, rates tend to move higher.

At this point, the scenario seems fairly simple.  If tomorrow morning's jobs report exceeds expectations, rates will likely continue to rise--vice versa if it disappoints.  The caveat is that next week's key events are perhaps even more significant in that our own central bank, the FOMC (or "The Fed") will make it's monetary policy announcement on Thursday.  This could be informed by tomorrow's jobs data, and if momentum moves convincingly in one direction or another, the upcoming movements in mortgage rates could be much larger than they have been.  The risk that they move higher instead of lower is one that should be considered against the fact that best-execution hasn't risen yet and that lenders may continue to price in the effects of the recent Guarantee Fee Increase.  (read more...)

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

Jeff Statz, Network Funding L.P.

I believe we saw the best pricing, for a while, earlier this week. Further, I think that there are sideways days mixed with weakness coming up.

Bob Van Gilder (BVG) Finance One Mortgage

If you like the rate your Originator is quoting go ahead and lock. Today's ADP report showed showed stronger than expected job creation, so rates went up. Tomorrow, the more important Non-Farm Payroll (NFP) report comes out. This monthly gauge on job creation always has the ability to cause further weakness in both the 10 yr Treasury and 3.5% Coupon mortgage backed security ( = further mortgage rate increases) if it's similarly stronger-than-expected.

Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage

Rates are .125% to .25% higher today than the record low range in the three business days leading up to today. I maintained a rate lock bias during those days. I still maintain the rate lock bias going into tomorrow's BLS jobs report. Consensus estimates call for +120k nonfarm payrolls created for August vs. +163k for July. Even exceeding this number slightly will reinforce the "mediocre is the new good" sentiment I discussed with July's jobs report when the mediocre +163k beat estimates of +100k and broke a 4 month streak of much weaker results. Rates rose after that July report last month, and tomorrow is likely to be a similar scenario.


  • 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).