Mortgage Rates, like most other interest rates, have seen record-setting levels of inactivity over the past 90 days.  The Brexit vote in late June pushed rates to all-time lows and then the jobs report in early July pushed them back in the other direction.  But after one week of correction, rates found themselves right in line with the pre-Brexit lows, and they've been stone cold sideways ever since.  

That might sound tedious and boring on an analytical level, but it's actually great news for mortgage markets.  It has the dual benefit of allowing operational staffs some time to catch their breath after the frenzy of activity earlier in the Summer, all the while keeping rates close enough to all-time lows to provide excellent opportunity for any potential mortgage borrowers.  In fact, the past 90 days have had the best-ever combination of "low" and "stable" rates in history.

Markets (like those that underlie mortgage rate movement) don't tend to stay this sideways for this long.  When they do, it's often followed by a bigger move in either direction.  The obvious candidate for a catalyst would be Friday's speech from Fed Chair Yellen.  While there's no guarantee that markets will react on Friday, it's definitely the biggest POTENTIAL market mover on the horizon.  This increases the risks associated with floating past tomorrow, though some risk takers may see it as an opportunity for rates to finally break lower.  If you choose to take that risk, make sure you set a limit as to how much rates could rise before you'd lock to avoid further losses.  

Loan Originator Perspectives

We keep talking about how boring the range mortgage rates have been trapped in for about a month, but we fail to realize how blessed we are that we are trapped in this range. Rates are only a .25% above all time lows.....locking in is an easy decision here. Many of us believe we are still yet to see the lowest of the lows, but timing is the question.  -Constantine Floropoulos, VP, The Federal Savings Bank

Very boring week for bonds.  With Yellen due to deliver her highly anticipated Jackson Hole speech on Friday, markets look set on making no bets and just hold steady.  We do have our final auction tomorrow, and today's 5 year auction was extremely solid.  It is common to rally once the supply is over, but we still have Friday's Yellen speech.  I don't see much to gain by floating, so if you are happy with current terms I would go ahead and lock ahead of Friday's Yellen speech. -Victor Burek, Churchill Mortgage

As surprising as it might seem, bonds were virtually unchanged, again, today.  I've been tracking MBS for 8 years, and don't recall many longer periods in such a defined range.  The scary/good part is that when this range breaks, there may be enough stored momentum to produce a dramatic move.  The $20 question is when, and whether that move is to higher, or lower rates.  Most of my pipeline is locked, current pricing is certainly attractive. -Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 3.375 - 3.5%
  • FHA/VA - 3.0 - 3.25%
  • 15 YEAR FIXED - 2.75%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • In the biggest of pictures, "global growth concerns" remain the driving force behind the long-term trend toward lower rates
  • Amid that trend, periodic corrections toward higher rates can and will happen.  These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks

  • Time horizon and risk tolerance are 2 variables to consider when it comes to locking.  If you have plenty of time and don't mind losing some ground, set a limit as to how much higher rates could go before you'd lock to avoid further losses, and then float in the hopes of never seeing that limit.
  • In the shorter-term, it's always good to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they've since begun to move back up in any sort of consistent way. 
  • 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).