Mortgage Rates rose ever-so-slightly today after Best-Execution fell to it's all-time low yesterday.  If you didn't catch it, please see yesterday's post if you need/want more clarification on what we mean by "all-time low best-execution."  

Although rates are marginally higher today on average, the Best-Execution rate of 3.875% is unchanged and today's weakness would instead be seen in slightly higher closing costs.  That said, things are close enough to unchanged today that NOT ALL lenders have higher costs.  A minority are actually slightly lower in cost.  That's good to see considering longer-dated US Treasuries moved higher in yield at a faster pace today.

This is due to the pheonomenon discussed HERE, only in reverse.  Essentially, mortgage rates have been able to hold a more narrow, more stable range than 10yr Treasuries.  That which frustrates rate-watchers as rates fall, is now somewhat of a relief as benchmark rates have risen.  After all, just a few weeks ago, 10yr yields were in the low 1.9's and today are near 2.05, yet mortgage rates have gone the opposite direction by roughly the same amount (4.0 to 3.875).


  • 30YR FIXED -  Down to 3.875%
  • FHA/VA - Back firmly to 3.75%
  • 15 YEAR FIXED -  3.375%
  • 5 YEAR ARMS -  2.625-3.25% depending on the lender

Lock/Float Considerations

Historically, when rates have gotten as low as they are today, there's only been a few hours ever, when they've been able to move any lower.  In other words, 3.875% is as low as Best-Execution has stably been.  This is what we're talking about as we've consistently said that there's limited improvements to be had under 4.0%.  If that ceases to be the case, it would constitute a pretty big shift in the Secondary Mortgage Market and we're not there yet. 

In addition, there's now the possibility that if Treasury yields, stock prices, and mortgage rates didn't move any lower than they did today following the details from the EU Summit, that they might have some predisposition to keep heading in a corrective direction.  Although we just pointed out the fact that mortgage rates don't always move with Treasuries, if the latter is under enough pressure, mortgages usually follow eventually. 

With a FOMC Announcement next week (Fed Rate Decision) as well as a fresh round of Treasury Auction supply, there continue to be risks ahead for Treasury rates that continue to operate in a historically low range.