Mortgage rates begin the week at new all-time lows yet again after falling significantly from last week's series of previous all-time lows.  Markets have been quite calm during domestic hours, but interest rates moved slightly lower overnight before domestic trading hours.  With bond markets holding steady to slightly improved since then, mortgage lenders continue to pass on those improvements in the form of more aggressive rate sheets.  

Despite recent press indicating that QE3 isn't affecting mortgage rates, the movement last week and today is rather impressive.  When rates move lower, we typically see them shift gradually from one Best-Execution level to the next.  This was the case several weeks ago when 3.5% regained its position as the most prevalent Best-Execution rate after a brief stint at 3.625%.  

As markets improved rapidly following the QE3 Announcement, 3.5% began to give way to 3.375%.  Now we come to the impressive facet of today's rate sheets:  Best-Execution has effectively blown right through 3.375% and is arguably 3.25% today at many lenders.  Regardless of the spread between the yields of mortgage bonds on the secondary market and the Best-Execution interest rates, this is as fast as rates can move lower.  That they have done so at all time lows is even more impressive.

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

Long Term Guidance: While the recently high degree of uncertainty remains very much intact, the Fed's decision to specifically target Mortgage-Backed-Securities in a third round of Quantitative easing provides a supportive undertone for mortgage rates.  We'd still advocate not trying to get too far ahead markets.  In other words, we wouldn't try to guess how low or how high rates might go before changing course.  For now, the trend is supportive and positive for rates, but we're watching it closely for the same sort of paradoxical responses that occurred in 2010.  Things look different this time around, but a lot of that has to do with Europe.  Rates remain near all time lows and risks of volatility remain high.  Those factors suggest that you stay vigilant regarding the day-to-day swings in mortgage rates.  If you're floating, set a limit as to how high rates would have to go before you cut your losses and locked.  Similarly, set a target of how low rates would have to get before you lock.

Loan Originator Perspectives

Victor Burek, Benchmark Mortgage

Rates are incredible...hard not to lock. If i was buying a new home and closing within 30 days, i would lock. You have to be more conservative with purchase loans. If i was in the process of refinancing, i would hold off locking until i was within 15 days of closing. But as always, with rates this low, it is never a bad idea to lock.


  • 30YR FIXED - 3.25-3.375%
  • FHA/VA - 3.25% - 3.5% (varies more between lenders than conventional 30yr Fixed)
  • 15 YEAR FIXED -  2.75%
  • 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).