Mortgage rates rose moderately following today's release of Minutes from the July 31st FOMC Meeting.  There was no meaningful new information, but there was also nothing to challenge the notion that the Fed would move any less quickly to reduce the pace of asset purchases--widely expected on September 18th.  Had such a challenge been seen, rates may have benefited today.  As it stands, they've risen back in line with Monday's levels.  Some lenders are slightly worse, and a small majority slightly better.  All are close to their highest levels in more than 2 years.  Conventional 30yr Fixed quotes (best-execution) are centered on 4.75%.

While it's true that the past two weeks have been volatile in bad way for mortgage rates, it's also true that the markets underlying the world of interest rates won't be operating at their full potential until September.  Again and again, the notion has been reinforced that the Fed is almost exclusively interested in the Economic Data to inform the timing of reducing asset purchases.  With the biggest economic report of the month set for the Friday after Labor Day, the potential reaction is much bigger.

Loan Originator Perspectives

"Give a little, but take more back. That's been the story since May 3rd. The best thing for rates would be a complete end of QE as tapering will only continue the path we're on until next year. I believe we'll see some stock market issues pretty soon as well as less than healthy economic numbers coming out. I think we are about 1-2 months away from bad reports and a stock market correction. This will drive money into bonds and push rates down. For now lock asap. " -Mike Owens, Partner, Horizon Financial Inc

Today's Best-Execution Rates

  • 30YR FIXED - 4.75%
  • FHA/VA - 4.25% or 4.75%
  • 15 YEAR FIXED -  3.75%-3.875%
  • 5 YEAR ARMS -  3.0-3.50% 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).