Mortgage rates moved slightly lower on Thursday after markets received their first Fiscal Cliff update of the week.  Earlier this morning, Senate Majority Leader Harry Reid said that over the Fiscal Cliff "looks like where we're headed."  Stock prices and bond yields fell steadily following that headline, but ultimately leveled off in the afternoon.  Despite improved trading levels in Financial Markets, lenders maintained relatively more conservative pricing strategies, with only moderate improvements to borrowing costs at the same rates offered yesterday.  30yr Fixed Best-Execution remained unchanged at 3.375%, though buying down to 3.25% could make sense for some borrowers at certain lenders.

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

Market activity picked up dramatically today as traders essentially treated Wednesday as an extended Christmas weekend.  A key consideration was that political leaders weren't scheduled to be back at work until today, and with the Fiscal Cliff still the dominant consideration for markets, it only made sense to pick up the pace as politicians returned.  Between now and the beginning of next week, it continues to be the case that there is more risk vs reward to floating.  This has been apparent in the relative lack of improvements in mortgage rates versus broader bond markets this morning and the ongoing tendency for markets to respond quickly and emotionally to Fiscal Cliff headlines.

Loan Originator Perspectives

"Just locked a couple, rates slightly improved from yesterday's close. Still locking as we submit loans. These rates are too good to gamble on further improvement. When the rate range established breaks, we'll see large, rapid rate changes. I don't want my clients to be on the wrong side of that!" -Ted Rood, Senior Originator, Wintrust 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 -  2.875% - 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, but uncertainty surrounding the Fiscal Cliff is applying upward pressure.
  • 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).