Welp.  There's that short term spike in mortgage rates we were talking about yesterday!

I think it's safe to say your float boat took on water today. Benchmark Treasury yields seemed to have no ceiling and MBS prices appeared to have no floor. On the charts the move was violent. It was downright scary actually.  Some lenders repriced for the worse more than once! It was like there were no bond buyers to stop the bleeding....(bc they are waiting for a reason to bargain buy!)

Yeh and after all that drama, guess what?

The best conventional/FHA/VA 30 year fixed mortgage rates are STILL in the 4.000% to 4.250% range for well-qualified borrowers. 4.000% is STILL on the board, but carries a more expensive price tag.  4.125% plus origination points is available and it's STILL worth the extra closing costs if you plan on holding your mortgage for at least the next 5 years.  4.25% is STILL widely quoted at no points. The best conventional/FHA/VA  15 year fixed mortgage rates are STILL in a range between 3.375% and 3.625%. I STILL won't endorse an ARM. And the more aggressive rate quotes are STILL generally only seen in the broker/direct banker market.

Important Mortgage Rate Disclaimer:  Loan originators will only be able to offer these rates on agency conforming loan amounts to borrowers who are have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their downpayment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. 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 more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as:  third party fees +  title charges  + transfer and recordation + escrows (things like upfront MIP (if required), property taxes, homeowners insurance, accrued interest)". 

Seriously. Nobody panic. We seeing exactly what we thought might happen this week. The bond market is bored by a lack of events and new information. The bond market is biding it's time by day trading the range to an extreme. This price volatility/wider trading range is helping traders book a larger profit. We were expecting mortgage rates to move in a wider range as a result.  Sorry if you've seen this already, but this is what was published last Thursday night.

From: Patience Pays Off For Mortgage Rate Watchers...

"The Employment Situation Report prints tomorrow morning at 8:30am eastern. This data is the most influential report released to the market on a monthly basis. It shapes investment strategies and shifts trader perspective. I am still confident that  mortgage rates will eventually extend their rally, but I have to warn you, the float boat might take on some water if the report is better than expected. This means you cannot panic if we experience a short term spike in mortgage rates in the aftermath."

MY OUTLOOK: I expect to see momentum build in favor of a mortgage rate recovery rally in the next 24 hours. The Fed will release their first consolidated asset purchase schedule at 2pm tomorrow afternoon. This event should be enough motivation to spark some "bargain buying" in the bond market. This event should allow lenders to offer lower mortgage rates. Once they do...we will be very clear on when we think the market is primed for interest rate locking. You better be ready.


You have to let the loan officer earn their commission. That's how you "ride the float boat" in this environment...make sure you have a damn good skipper. Plain and Simple.

The segmented nature of the primary mortgage market makes it critical for a consumer to do more than ask their potential originator for a rate/quote though. You should first be asking questions like...

  1. Can you estimate a closing date on my purchase/refinance?
  2. How do you order your appraisals? Who do you order them through? Have you experienced processing slowdowns related to appraisal issues?
  3. Will my loan be sold/brokered in the secondary market?  If you intend to sell/broker my loan in the secondary market, how many investor options to you have?
  4. Can you provide a breakeven analysis to help me consider my permanent buydown options?