Mortgage rates made a move toward lower territory early this morning but just couldn't hold the improvements through the end of the day. The gains didn't even make it past lunch!

After topping out around 11am, mortgage-backed securities prices (price up = rates down) started to lose steam with steep losses noted just after 2pm.  Although the big picture significance of these unfriendly movements is muddled by a low volume holiday trading environment, lenders were still forced to reprice for the worse.

With reprices behind us and our mortgage rate model updated, loan pricing remains in-line with quotes offered by lenders on Friday afternoon,  which puts the best execution 30 year fixed mortgage rate at 4.875. 

Important Mortgage Rate Disclaimer: Loan originators will only be able to offer these rates on agency conforming loan amounts to very well qualified 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 down payment 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) 

Volatility remains an ongoing theme in the secondary mortgage market. This was evident today via the rapid decline in prices between 11AM and 2pm, from the highs and lows (prices up = rates down).  Volatility is further exaggerated this week by a light economic calendar and a holiday distracted marketplace.  More simply put, there wasn't any data released today that would have driven changes in MBS (the "mortgage backed securities" that dictate loan pricing), leaving them at the whim of random news headlines and day trading.  Tomorrow is not much better, but Wednesday and Thursday contain a reasonable amount of scheduled economic data that could create movement in rates.  And while banks may be open on Friday, markets are closed and not many folks are working.

In this shortened holiday week, in an era already fraught with volatility, we'd only expect more of the same.  However, with last week's strength in MBS following huge losses in the first half of December, we finally have something interesting to which to turn our attention: namely, whether or not MBS are able to hold above a few key levels in the event they experience weakness between now and the end of the month (if MBS prices hold above certain levels, it equates to mortgage rates holding BELOW certain levels).  4.875 is the first of such levels, and even though the closing costs involved with 4.875% will be somewhat higher than they were this morning, the "best-execution" status of 4.875 remains intact.