Mortgage rates were slightly lower today, recovering only some of the weakness seen over the past several business days.  Apart from last Friday, today's rates are still the highest in a week for most lenders.  Context is important though.  We're not talking about big swings in rates.  In fact, contract rates themselves aren't even moving.  Rather, it's the closing costs associated with any given rate that have been rising and falling modestly.  3.625% remains the most prevalent conventional 30yr fixed rate quote for top tier scenarios.

The absence of drama and volatility in the near term past is no guarantee of the same in the next few days.  The markets that underlie mortgage rate movement have been consolidating in a narrow, sideways range.  That's the sort of pattern we typically see before a higher energy move.  Unfortunately, the increased likelihood of a bigger move doesn't carry a connotation about whether it will be higher or lower.  So approach it as a "higher risk, higher reward" scenario when it comes to locking and floating.  In any event, if you choose to float, always have a game-plan regarding locking if it markets start moving against you.

Loan Originator Perspective

"Rates trickled slightly lower today, despite some corporate bond issuance. Many, but not all, lenders improved their pricing mid day. World economic conditions aren't going to cure themselves today, this week, or this month, so my hunch is rates continue to hover near recent ranges for a while. With that being said, most of my pipeline is locked, with the exception of new files a month or more from closing. Pricing is great, if your risk tolerance is low and/or your funds to close are tight, I'd lock while the locking is good! " -Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 3.625 
  • FHA/VA - 3.25-3.5%
  • 15 YEAR FIXED - 3.00
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • The Fed finally hiked on December 16th, causing fears of rising rates in 2016.
  • But  global financial markets came into the new year in distress.  Now markets aren't even convinced that we'll see another Fed rate hike in 2016.  Major stock indices plummeted around the world, and investors sought shelter in the bond market.  When investor demand for bonds increases, rates fall.

  • So we're left with much lower mortgage rates despite the Fed having just begun its hiking cycle.  This paradoxical trend can continue as long as global market turmoil fuels a demand for safer haven investments.  A big bounce in oil/stock prices could mean trouble for rates--at least temporarily.

  • 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).