Mortgage rates stood at their lowest levels in more than 2 months as of last Wednesday, but have since moved higher for 3 straight days.  This leaves them roughly in the middle of their recent range--seemingly ready to move in either direction depending on this week's motivation.

Investors will be looking for that motivation first and foremost from Fed Chair Yellen's congressional testimony, which begins tomorrow morning and continues on Wednesday morning.  Although not an official Fed policy statement, these testimonies often serve as a venue for the Fed Chair to confirm, deny, or tweak prevailing policy expectations.  In other words, congress will almost certainly press Yellen for clarity on the Fed's rate hike outlook and other potential policy changes.  

Even though she would technically be talking about the Fed Funds Rate, her answers could cause volatility in longer-term rates (like mortgages).  Given that we're currently in the middle of the recent range, it's not hard to imagine a quick move to the higher end of that range if Yellen's comments are upbeat and supportive of a faster rate hike outlook.  Of course, she could take the other approach and strike a more cautious tone (in which case, rates might fall back to last week's lows, but as always, the point about big-ticket events is that they have the power to cause bigger movements in EITHER direction.  Bottom line: we don't know who will win the game--only that the stakes are higher.

Loan Originator Perspective

With Yellen on tap tomorrow, I think it is highly risky to float.  She will move the markets, only question is which way and how far.  We have more room above for rates to rise before any significant support comes in play to help.  I like locking here. -Victor Burek, Churchill Mortgage

I think you need to start locking here unless you have an above average appetite for risk.  We’ve broken the 2.42 ceiling so we need to consider it a floor (for now!?!).  In that case we’re at the lower end of the current range meaning there is more potential for pain than there is for pleasure.  Yellen is on deck tomorrow and the data deluge begins Wednesday.  Lingering in the background is the Feds eventual need to reduce the size of its MBS holdings.   I’d bet Yellen’s word’s will be closely monitored tomorrow for hints of what’s to come on this topic.  It could be an interesting week.  -Jason B. Anker, Vice President- Loan Officer at Salem Five

Bond markets slumbered today, with small losses that impacted mortgage pricing marginally.  My pricing was virtually identical to Friday's.  Tomorrow and Wednesday brings Chairwoman Yellen's semi-annual Congressional testimony, which should prove interesting.  Investors will be on high alert for any hints regarding future Fed policy, despite no chance of any significant Fed policy announcements.  Lock/float is a coin toss, depends on whether you feel lucky!  -Ted Rood, Senior Originator

Today's Best-Execution Rates

• 30YR FIXED - 4.125-4.25%
• FHA/VA - 3.75%
• 15 YEAR FIXED - 3.375%
  
• 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

• Rates had been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election

• Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm
  
  
• With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to return to pre-election levels until well after Trump takes office.  Rates can move for other reasons, but it would take something big and unexpected for rates to get back to pre-election levels. 
   
• We'd need to see a sustained push back toward lower rates (something that lasts more than 3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers. 
   
• 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).