Mortgage rates continue to bide their time, holding just under 4 percent on average.  Some borrowers might see their quote move up .125% from yesterday, but others will be quoted the same rate with slightly higher closing costs.  A few lenders didn't move at all, but they're the exception.  Overall, rates were slightly weaker, resulting in a better balance between 3.875% and 4.0% as the two most prevalently quoted conforming 30yr fixed rates for top tier borrowers. 

Given the strong move higher in the stock market combined with the fact that rates have been taking a lot of guidance from stocks, today's marginal increase in rates is actually a strong showing.  The bond markets that underlie mortgage rate movement have done more to march to their own beat while broader markets make bigger moves.  In the bigger picture, however, those broader markets will continue to inform mortgage rate movement, and the short-term trend is slightly weaker (i.e. higher in rate).  It could still be a day or two before we know if this weakness is merely a consolidation of October's bigger moves or if it's the early phase of a reversal toward even higher rates.


Loan Originator Perspective

"I continue to favor floating all loans until within 15 days of funding. Treasuries and MBS continue to remain in the downward channel but well off the lows we experienced last week. Economic data and the large stock rally of the last few days continues to be ignored by the bond markets. With stocks rallying over the last couple days, you would expect bonds to be far worse off, so what do bond traders know that stock traders dont?" Victor Burek, Open Mortgage

"Another fairly static day for rates today, as we continued within the recent range. My rate sheets were just slightly off yesterday's levels, but hardly enough to notice for most scenarios. We get some inflation data tomorrow, which can influence rates. My guess is that CPI comes in below expectations, which should help rates. Until we start trending upward, borrowers with a bit of risk tolerance may want to continue floating, at least until they're within 30 days or less of closing." -Ted Rood, Senior Mortgage Originator

"Another sideways day for interest rates trying to determine their identity. There is no question we are at a pivotal point that may pave the path for the balance of the year and early part of next year. Look to stock market 3rd quarter earnings and forecasts for the following quarter and forward fiscal year outlook to potentially dictate the direction we may take, in addition to any data, and FED chatter. I'm only locking loans cleared to close. " -Constantine Floropoulos, Quontic Bank

"While we still could be a few days away from any clear direction as to where rates are headed, I'm advising my clients to lock and take these great rates. The risk is too great for an increase to not take the rewards we've been given." -Brent Borcherding,

"Another Ho Hum day in the markets today with very little going on. Floating remains viable for the near term until something changes to influence decision making. Still, if you're closing in 15 days or less and you like the pricing you have now there is no sense in waiting any longer to lock in. For longer term closings it may make sense now to try and float until you gain in pricing from a shorter lock period, however, keep tuned in to the markets daily for any changes." -Hugh W. Page, Mortgage Banker, Seacoast National Bank

"Rates were little changed today in the face of yet another large equity rally. This leads me to believe the next move may be a large one, especially should treasury yields break to the up side. If you are risk averse today is a good day to lock. If you can stomach possibly locking in at a higher rate I would wait for the release of the inflation data tomorrow before choosing to lock." -Manny Gomes, Branch Manager Norcom Mortgage


Today's Best-Execution Rates

  • 30YR FIXED - 3.875-4.0
  • FHA/VA - 3.5
  • 15 YEAR FIXED -  3.125
  • 5 YEAR ARMS -  3.0 - 3.50% depending on the lender

Ongoing Lock/Float Considerations

  • The hallmark of 2014 has been a narrow range in rates.  Too many market participants bet on rates going higher in 2014, and markets punished that imbalance with a paradoxical move lower.

  • European markets helped that process along and continue to play a prominent role in keeping US rates lower than they otherwise might be.  
  • For most of the Summer and early Fall months, rates held a narrow range of 4.125% -4.25% (essentially where the 2014 rate recovery has bottomed out) and finally broke to a 3.875%-4.0% range in mid-October.  It's too soon to tell if this is a brief window of opportunity or the continuation of 2014's very gradual improvements.

  • As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).