Mortgage rates improved modestly today, making it back in line with Friday's levels.  These aren't the very best rates of 2014, but they're close enough to make the following statement.  Rates have now been holding near 2014 lows for 5 straight days.  Despite volatility in markets during the day, the end-of-day rate levels haven't moved too much during this time. The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) remains 4.125%, with slightly fewer instances of lenders being better-priced at 4.25%.  Most borrowers will experience today's move in the form of lower closing costs for the same rates quoted yesterday. In terms of effective rates, that change in closing cost equates to a drop of 0.02%.

This recent phenomenon of rates staying near the lows with relative stability is uncommon.  Normally, when we have a quick move to recent highs or recent lows, rates will continue in the same direction or reverse course with a bigger correction.  This time around, however, they continue to bide their time without giving any clear signals about their next move.  On one hand, the longer we go without seeing a break to new lows, the riskier it is to wait for them (which suggests locking).  On the other hand, we haven't seen a sense of urgency for rates to move back higher, and until we do, floating for small gains can pay off as long as you're committed to lock if markets force your hand (i.e. commit to locking if rates rise by a certain amount, say, to the highest levels in the past 5 days).

Loan Originator Perspectives

"Mortgage bonds rallied strongly today, and rates improved as we regained yesterday's losses plus some. Every day we stay near current levels helps define our new, somewhat lower, range of rates, and (we hope) sets up the potential for further gains if/when economic data or geopolitical tension come into play. if you've waited this long to lock, you're ahead. Close to closing? May be time to lock up the gains. Weeks till closing? Watchfully floating could pay additional rewards!" -Ted Rood, Senior Mortgage Planner, tedroodteam.com

"If you floated overnight, this mornings rate sheets were worse...but if you didn't panic lock and continued to float by mid afternoon most lenders had repriced to the better bringing rate sheets to similar levels of yesterday. My advice will be the same as yesterday. If you are within 15 days of closing, go ahead and lock as we are near the bottom of the current range. If you are closing in more than 15 days, I would float to see if the 10 year can break below 2.48." -Victor Burek, Open Mortgage

"Fed speakers are out in full force this week and so far the bond market is liking what they are saying. Tomorrow we have Janet Yellen speaking int he morning and the release of the Fed Minutes at 2 pm. Floating into the Fed minutes appears at the moment to be safe. The trend does appear to be favoring lower rates but we do have to remain cautious. " -Manny Gomes, Branch Manager, Norcom Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 4.125%-4.25%
  
• FHA/VA - 3.75-4.0%
  
• 15 YEAR FIXED -  3.25-3.375%
  
• 5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

• The Fed has stayed the course on their $10bln per meeting reduction in bond buying, though markets have handled it relatively calmly compared to the days of "coming to terms with tapering" in 2013. 
  
• Rates fell significantly in January, leveled-off in February and took choppy steps higher in March.  From there, they settled into a flat range mostly consisting of 4.375 and 4.5%, but with occasional forays to 4.25 and 4.625%. 
  
• While the bias had been very slightly toward higher rates, it reversed course in April and rates returned to the lower end of the range by May 1st.  As the "weather effects" fall out of the spotlight, market participants are seeing a bit more organic weakness in the economy than they'd expected. 
• Earlier in May, the focus looked to be returning to economic data, but that proved short-lived as prospects for European central bank easing overwhelmed  some of the incoming data, pushing rates lower while data suggested a move higher.
• As of the third week in May, rates were as low as they've been since June 2013, more than confirming a break below the 2014 range.
• Looking back at recent movement, it's had a disconcertingly small amount to do with 'normal stuff' like economic data and Fed policy.  Temporary and unpredictable factors currently account for too much of the movement to make firm bets on rates moving either direction in the short term.
• (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).