Yuck. Mortgage rates are not heading in the right direction.

In the past two days consumer borrowing costs on mortgage rate quotes at or below 4.25% have risen nearly 1.00%. This represents a $1,000 increase in closing costs for every $100,000 in loan amount.

The best par 30 year fixed mortgage rates remain in the 4.00% to 4.25% range  for well qualified consumers, but 4.00% quotes are quickly approaching "not worth the points" territory, which means the costs/points structure is only advantageous to borrowers who intend to keep their mortgage for at least the next 5 years, otherwise paying points to float down your note rate is not worth the additional closing costs (ask your loan officer for a breakeven analysis). Rates below 4.00% are now considered "phantom"...still available but hard to score. In reality, after two days of closing cost increases, 4.25% is a well-qualified borrower's "best execution" note rate. If you're seeking a shorter term mortgage loan, the best par 15 year rates are still in the  3.375% to 3.625% range.

Mortgage Rate Disclaimer : Loan originators will only be able to offer the lowest conventional and government (FHA/VA) mortgage rates if the terms of your loan do not trigger  risk-based loan level pricing adjustments (LLPAs). If you do not fall into the "perfect borrower" category make sure you ask your loan originator for an explanation of the characteristics that make your loan a riskier investment. (eg. credit scores under 720 and investment properties)


If you are floating your loan, you are doing so in anticipation of a decline in mortgage rates on November 3, 2010. You are waiting for the FOMC to announce Quantitative Easing.

This post shares background on Quantitative Easing: Mortgage Rates in Limbo. Waiting on Quantitative Easing

This post includes my thoughts on how low mortgage rates might go on November 3, 2010 (the next FOMC meeting): How Low Might Mortgage Rates Go After QEII? What if QEII Disappoints?