Mortgage rates finally improved on Thursday after moving sideways or higher since last Thursday.  The drop in rates/costs was broad-based with less of the stratification between lenders noted yesterday.  Depending on the scenario, this gets some of the more aggressive lenders back into 3.25% territory, while many others remain at 3.375%, simply with lower borrowing costs vs yesterday. 

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

Bond markets and mortgage-backed-securities began the day slightly weaker territory, which would normally be a prelude to higher rates on lenders' rate sheets.  Rates markets disregarded economic data to level off in the morning and began improving even before the afternoon's Treasury auction.  After the auction passed with reasonable success, levels continued to improve into the afternoon, prompting some lenders to offer improved rate sheets.

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.   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

"Our most active refi clients are folks that have already captured rate lows during 2012, so they're holding for macro themes (e.g., U.S. fiscal showdown and Eurozone debt contagion) that may push rates lower before they refi again. The recent rate uptick has made more risk averse refi clients decide that they want to capture the still-near-record lows before any further upside risks. And as for home buying clients who are getting into contract this week, we have a rate locking bias. " -Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage

" Rates are rallying in the middle to late afternoon. Many lenders have yet to reprice for the better. If your lender has repriced better today and you are within 15 days of funding, i would lock. If your lender hasnt repriced yet, i would float over night. i would float any loan that is outside of the 15 day window. " -Victor Burek, Benchmark Mortgage.

Today's Best-Execution Rates

• 30YR FIXED - 3.375%
• FHA/VA - 3.25% (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
• This 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).