After improving for several days and falling in line with all-time lows,  Mortgage Rates took a step back today.  Just as most of yesterday's gains were in the form of borrowing cost reductions, most of today's weakness will be experienced in the form of higher borrowing costs as 3.875% remains a prevalent Best-Execution rate.  But like yesterday, some scenarios may be looking at a slightly different rate today.

Today's Rates: 

  • BESTEXECUTION 30YR FIXED -   Less Firmly 3.875%, More 4.0% Offerings
  • FHA/VA - still at 3.75% !!
  • 15 YEAR FIXED -  3.375%-3.5% 
  • 5 YEAR ARMS -  low to mid 3% range, variations from lender to lender.

Ongoing Guidance: I'd lean more heavily toward locking when Best-Ex is under 4.0 these days.  While I'm optimistic that there are a few more gains in store for MBS with the beginning of new Fed Buying, I'd hate to see 3.875 unexpectedly evaporate on some surprise headline out of Europe or turning point in economic data.

New Guidance: Take a look at yesterday's guidance.  Here's the graphic again:

Today's losses may have moved your scenario further to the right side of the spectrum making it seem relatively more advisable to float.  While that is in fact the tacit suggestion, there are two caveats.

First, The Employment Situation Report will be released this Friday and may well exert some influence on interest rates.  Bottom line, a big enough number on that report could cause rates to break out of the current range, even if only temporarily.

The second caveat is a bit more subtle.  In general MBS prices tend to move in the same direction as longer maturity Treasury prices, which tend to move inversely with stocks (meaning Treasury yields move in the SAME direction with stock prices).  The late day come-back in stocks today brought averages just high enough to cast some doubt as to whether or not yesterday's stock market losses were a sign of things to come.  If stocks are able to rally further, it could continue to exert pressure on bond markets.