Mortgage rates moved lower today, somewhat significantly, depending on the lender.  In many cases, quotes are an eighth of a point lower compared to Tuesday morning.  Some lenders made the move yesterday.  For others, today did the trick.  In both cases, the "effective rate" (a hypothetical rate that accounts for lender-imposed closing costs) fell at its best pace in weeks.  

Today's quotes are the best since December 12th on average.  4.25% is now the most prevalent conventional 30yr fixed quote on top tier scenarios, although 4.375% remains fairly common.  

While I would love to tell you that this is a sign of a big shift back in a friendly direction, the gains are largely a result of the year-end bond trading environment.  It's not the same bond market that's normally pulling the levers behind the scenes.  Volume is lower and participants are in shorter supply.  Trading considerations differ from other times of the year.  It can all add up to unexpectedly quick moves and the APPEARANCE of new momentum that is subsequently erased in the new year.  

That's not to say a big bounce toward higher rates is guaranteed next week, but it's at least an equal possibility.  Whatever the case, the past 2 days of gains can't be viewed as the sign of a new trend.

Loan Originator Perspective

I would love to float into this rally and hope it continues, but I can't base my strategy on hope. We've had too many violent selloffs following mini rallies like this in the last 2 months. Until we have a substantial follow through of this current move lower in rates (which has occurred with exceptionally light volume) I am locking in at the earliest opportunity per loan.   -Gus Floropoulos, VP, The Federal Savings Bank

Today's Best-Execution Rates

• 30YR FIXED - 4.25-4.375%
• FHA/VA - 4.0%
• 15 YEAR FIXED - 3.375-3.5%
  
• 5 YEAR ARMS -  3.0 - 3.5% 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 make significant improvements until after Trump takes office.  Rates can move for other reasons, but it would take something big and unexpected for rates to move appreciably lower. 
   
• 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).