Mortgage rates were slightly lower this morning, but many lenders offered improved rate sheets as the day progressed, bringing average just barely below the lows of the week.  The lows were achieved only in terms of closing cost for most lenders.  In other words, the most prevalent 30yr fixed quote for top-tier borrowers (best-execution) remains at 4.5 percent on average, and simply costs slightly less in terms of closing costs (or returns slightly more if you're not paying any). 

Lenders continue to be stratified, meaning that pricing varies more than average between lenders and even in cases where two lenders may be in similar territory on one rate, the costs to move between rates can be quite different.  For instance, using a $200k loan as an example, one lender might only charge $1100 to move from 4.5% to 4.375% whereas another might be just over $1600.  Buying down to 4.375 or 4.25% can good sense in some cases.

This week turned out to be excruciatingly uneventful considering the big potential heading into it as well as the volatility that's preceded it.  So far, the consolidation seen since July 5th's highs has been quite good, with rates back to July 3rd levels or better in most cases.  Although it's been slightly friendlier than average, consolidations are what we hope and expect to see more often than not after huge movements.  The caveat is that there has to be a lull in the sources of volatility long enough for that to happen. 

The fact that markets did little to react to Bernanke's Congressional Testimony this week essentially provided one of those 'lulls.'  Next week stands a chance to continue the lull as markets will likely be most intently focused on the employment data and Fed Announcement in the following week.  Keep in mind that the 2 weeks of improvements behind us are more a factor of bouncing back from July 5th's super spike.  The day to day movements have been smaller and smaller.  We're essentially leveling off and should continue to see moderate movements in the week ahead, that take their cues from the economic data.

Loan Originator Perspectives

"MBS up again today, helping pricing by about .25%. We've gained 6 of last 7 days, and while there haven't been any "face melting" rallies, sure nice to see green on MBS charts. No relevant data today, which also signals potential this rally has legs. Trending towards a short term float bias, looks like we have a bit more room for pricing improvement." -Ted Rood, Senior Originator, Wintrust Mortgage

"Nice bounce back from yesterday going into the weekend. Rates will most likely stay in the 4.375% - 4.625% range until the July 31st Fed meeting. Buyers should lock in and buy down if able." -Chris Marconi VP Residential Lending First Midwest Bank

"Nice rally to end the week. Not a fan of locking on Friday's but if I had a purchase loan closing within 20 days, I would be locking if your lender reprices for the better. All other loans, I like floating over the weekend." -Victor Burek, Open Mortgage.

"I'm advising clients to lock if within their window - even up to 60 days. There's too great a feeling of unease in the market. If rates improve, my lenders all offer renegotiation/float down options. If rates worsen, my clients are protected." -Matt Hodges, Charlottesville Sales Manager, Presidential Mortgage Group

"Rates remain somewhat stable as the week draws to a close. Next week be on the lookout for the auctions (2,5,7 year) pay particular attention to the 5 and 7 year as those will most likely have most impact on mortgage rates. (Depending on strength and/or weakness) The 5 year is Wednesday and the 7 year Thursday- both at 10 am PST. (Hint-subscribe to updates on www.mortgagenewsdaily.com to follow along in more detail).  Be safe, play hard and love often- BVG"  - Bob Van Gilder (BVG), Finance One Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 4.50%
• FHA/VA - 4.25%
  
• 15 YEAR FIXED -  3.625%
  
• 5 YEAR ARMS -  3.0-3.25% depending on the lender

Ongoing Lock/Float Considerations

• After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
• Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  
• Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
• The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
• Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from 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).