Mortgage rates spiked to the highest levels of the year on Friday after hovering close to them for several days.  But news out of Europe over the weekend caused major movement in financial markets at the start of the day.  One of the biggest beneficiaries was the US bond market where Treasuries yields and mortgage rates fell appreciably.  Interestingly enough, today's appreciable improvement perfectly counteracted Friday's appreciable weakness, leaving the average lender right in line with Thursday's latest rate sheet offerings.  This brings the most prevalently-quoted conventional 30yr fixed rate back to 4.125% for top tier scenarios, though a few lenders are .125% higher or lower.

Coming into this week, we knew it would be volatile, and the volatility likely isn't over.  Any time there is a such a forceful move toward lower rates, it's tempting to look at it as a bigger-picture turning point.  While it may turn out to be just that, it's not something that we can safely bet on after only one, or even two days of improvements.  European market drama will not be resolved this week, and even the first phase of it won't be resolved by tomorrow.  From there, we have several other significant events happening in the following 2 days that could add significantly to the fast-paced movement.

Truly, there is no way to know if the events in Europe or if our domestic economic data will help or hurt from this point on.  Today, most variables were helpful, but all we can really know is that we have been in a general trend toward higher rates in 2015.  It will take more than 1 day of improvement to change that, and it would take much more improvement than what we saw today.  It's one thing to HOPE to see such an improvement, but betting on it is just as risky as it has been.

Loan Originator Perspective

"Well, the Greek fiscal drama appears to finally be getting serious, as their banks are currently shuttered. Bonds gained, but are still below levels we saw as recently as June 19th, which is rather disappointing. Is this the start of a major rally, or just a "buy the rumor, sell the news" head fake? I'd love to say rally, guess we'll know over the next few days. If you're floating, wait until the end of day to lock as lenders continue to improve pricing. Going to keep floating? Have your seat belt buckled and loan officer on speed dial!" -Ted Rood, Senior Originator

"News out of Greece has helped rates rally today to regain all of the losses from Friday and some. By mid-afternoon, most lenders have repriced for the better with several improving rate sheets more than once. Long term, nothing much has changed. U.S. data has been relatively strong and the Fed still intends to hike rates later this year. Since today's gains is more headline driven and not data driven, i think it is wise to lock in these gains. Floating is very risky as 1 headline could wipe these gains out in a instant." -Victor Burek, Open Mortgage

"Mortgage Rates improved today, but is it enough to convince us of a change in direction? Well, it's not enough to convince me...just yet. There is a lot of global chatter that may be the impetus for this move, and most of it revolves around Greece. We've seen this song and dance so many times now, it is very hard for me to believe that this ends in any other fashion than them being bailed out and that could easily make this rate improvement very short lived. I'd lock because if in fact, Greece is out and rates drop because of it...they will drop more than enough to look into float downs/re-negotiations." -Brent Borcherding, brentborcherding.com

Today's Best-Execution Rates

• 30YR FIXED - 4.125%
  
• FHA/VA - 3.75-4.0
  
• 15 YEAR FIXED - 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).