Mortgage rates improved today, capitalizing on friendly market movements that arrived too late in yesterday's session to make it onto rate sheets in any meaningful way.  While lenders may release 1-3 rate sheets each day, MBS ('mortgage-backed-securities') are constantly trading in the secondary market.  It's operationally inefficient for lenders to release new rate sheets every time the underlying markets move, so there are periodic thresholds where "enough is enough" to change lockable rate offerings.   While part of yesterday afternoon's positivity was sufficient for that to happen, lenders passed along more of it this morning after bond markets carried the gains through the overnight session. 

The improvement wasn't insignificant, but neither was it enough to suggest a change to the prevailing best-execution rate at 4.5%.  It continues to be the case that buying down to 4.25% can make sense for some borrowers.

Both on the approach and in retrospect, this week was uneventful.  The day to day movement in rates was the smallest we've seen in months and this is characteristic of the sort of consolidation that was likely to follow the drastic spike to new multi-year highs on July 5th.  The question now becomes: "now what."  The events next week are likely to "break" the consolidation seen over the past several weeks.  When that happens, it may happen big.  This could mean a quick return to those July 5th highs (or higher), or a welcome reprieve of "low 4's."  Of course "in between" is always a possibility, but all we can know is that the potential is there for extreme volatility.  All things being equal, the long term trend is toward higher rates and it should be assumed intact unless it's meaningfully broken.  We'll certainly be discussing that if it happens.

Loan Originator Perspectives

"Flat to slightly higher prices in MBS Land today. Will take a flat Friday anytime after some of the prior recent Friday debacles. Too early to know if typical late day leakage will come into play, but for now, no reprices and somewhat better pricing than yesterday. We'll take it!"  - Ted Rood, Senior Originator, Wintrust Mortgage

"Best lock day of the week. Held the line by floating yesterday, and it paid off this morning. Next week is important to see if this rate dip will hold or not. The Fed meeting will likely help steady rates with a pro-QE message, but better 2Q GDP and July jobs growth would hurt rates. Either way, rates aren't likely to go lower, it's only a question of whether this rate dip holds a bit longer or rates resume their 2013 rise." -Julian Hebron, Branch Manager, RPM Mortgage

"I have never been a fan of locking on Friday's and today is no different. MBS have improved since Thursday but the rate sheets I have seen don't reflect all the improvements. I favor floating over the weekend but be prepared to lock early Monday if the market moves in the wrong direction." -Victor Burek, Open Mortgage

"The week ended where it started: 30 Year bouncing around 4.5% Buckle up for next week: FED meeting, Unemployment Numbers, GDP ... do not mess around, LOCK." -Chris Marconi VP Residential Lending First Midwest Bank

Today's Best-Execution Rates

• 30YR FIXED - 4.5%
• FHA/VA - 4.25%
  
• 15 YEAR FIXED -  3.625%-3.75%
  
• 5 YEAR ARMS -  3.0-3.25% depending on the lender

Ongoing Lock/Float Considerations

• After rising consistently from all-time lows in September and October 2012, rates challenged the long term trend higher, but failed to sustain a breakout
• Uncertainty over the Fed's bond-buying plans is causing immense volatility in rates markets and generally leading rates quickly higher
  
• Fears about the Fed's bond-buying intentions were proven well-founded on May 22nd when rates rose to 1yr highs after the Fed indicated their intention to taper bond buying programs sooner vs later
• The June 19th FOMC Statement and Press Conference confirmed the suspicions.  Although tapering wasn't announced, the Fed made no move to counter the notion that they will decrease bond buying soon if the economic trajectory continues
• Rates Markets "broke down" following that, as traders realized just how much buy-in there was to the ongoing presence of QE.  These convulsions led to one of the fastest moves higher in the history of mortgage rates and market participants have not been eager to be the among the first explorers to head back into lower rate territory until they're sure they'll have some company.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).