Mortgage rates barely budged in most cases today.  Some lenders were just slightly better.  Others were worse.  The average rate quote is unchanged vs yesterday with most lenders still offering conventional 30yr fixed rates of 4.125% on top tier scenarios.  

The lack of movement on rate sheets belies the fact that underlying market conditions improved.  Specifically, MBS Prices (the mortgage-backed-securities that most directly affect the rates lenders can offer) were higher.  This typically corresponds to lenders offering lower rates.  In fairness, several lenders did adjust rates lower in the middle of the day as markets improved, but that merely brought the average lender back to unchanged levels.

This is part of the phenomenon discussed in yesterday's headline where mortgage rates have taken the metaphorical elevator up, only to take the stairs on the way back down.  In other words, the current market environment is volatile and has mostly pushed rates higher for the past 2 months.  For several reasons, this results in lenders being hesitant to publish lower rates at the first sign of market positivity (not the least of which being that recent precedent suggests ongoing upward pressure).

From a lock/float standpoint, this decreases the potential reward for waiting to lock.  That outlook doesn't really begin to improve until we see several successive days of improvement in markets and adjustments in lenders' rate sheets that keep better pace with the market movement.

Loan Originator Perspective

"Mortgage Rates improved, slightly, today. I hold the belief, at this time, that if your scenario works...lock it. The theme remains the same, until we see a significant corrective move lower, the greatest risk is rates moving upward." -Brent Borcherding,

"Despite today's mini rally sparked by what appears to be the Greek debt deal falling apart, floating remains very risky. The trend continues to not be the friend of those hoping for rates to move lower. A headline can appear at anytime causing today's gains to be wiped out in a instant. Until we get a decisive move lower, i will continue to favor locking. If you do plan to lock today, hold off until later as some lenders have repriced for the better and more are likely to come." -Victor Burek, Open Mortgage

"In today's episode of "How The Greek Debt Turns", the rumored agreements seem to be fading fast, which is hardly surprising. Bond markets logged small gains, and my pricing improved marginally over yesterday. The upward rate trend is hardly threatened, however, and "the trend is the trend, until it isn't anymore." I have far too little confidence in a one day, low volume rally to change my risk tolerance for floating. I'd still locking early, and if a huge rally ensues, I'll work with my secondary department to improve my existing rate locks." -Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 4.125%
  • FHA/VA - 3.75
  • 15 YEAR FIXED - 3.25-3.375%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • 2015 began with a strong move to the lowest rates seen since May 2013.  The catalyst was Europe and the introduction of European quantitative easing.

  • It's a highly uncertain time for global financial markets.  There is much debate over whether or not the global economy is turning a corner, thus justifying a widespread move to higher rates.  That's made 2015 significantly more volatile than 2014 for markets.  This means lender rate sheets may change appreciably from day to day, and sometimes even several times in the same day.
  • Bottom line: European Quantitative Easing helped push global rates to all-time lows in April.  Now, the big risk for mortgage rate watchers is that we might have turned a long term corner.  That risk is being compounded by speculation about the Federal Reserve raising rates by the end of 2015.

  • May and June have amounted to the 2nd major move higher bounce so far this year.  Every time this happens, we have to consider the possibility that this will be a big-picture, long-lasting correction.  Until such a thing can be ruled out, Locking makes far more sense. 

  • 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, conventional 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).