Yesterday we noted that things seemed "quiet, almost too quiet."  As is sometimes the case with such episodes of quietness, it resulted in some volatile market movements today.  Thankfully, that volatility worked in Mortgage Rates favor, and depending on the lender and your scenario, you'll either see improvements to Best-Execution rates or simply lower closing costs on the same rates from yesterday.


  • 30YR FIXED -   3.875-4.125%, mostly 4.0%
  • FHA/VA - 3.75%, some 3.875%
  • 15 YEAR FIXED -  3.375%-3.5%
  • 5 YEAR ARMS -  low 3% range, huge variations from lender to lender.

Guidance: Rates improved ever so slightly yesterday and we advised a stronger lock bias.  Rates moved down a little more today and we'd once again advise a stronger lock bias.  Simply put, the incentive to float when Best-Execution creeps into the 3.875%-level is not very good when viewed in the context of historically low rate offerings.  To wit, 3.75% best-execution is as low as things have ever been, and that was woefully fleeting (a more appropriate "all-time low"--one which more folks may have actually witnessed--would be the 3.875% level, just like today among some lenders).  The bias toward locking has nothing to do with what we think the market is going to do and everything to do with managing risk based on current information and past precedent.  Risks of floating ≠ possible returns at these rates. 

Not only that, but even markets may be giving us clues that rates would have a hard time improving much right now anyway!  As we've discussed in the past, although Mortgage-Backed-Securities are the most accurate and direct drivers of mortgage rates, longer-dated US Treasuries do also tend to move in the same direction.  Considering the recent trading range in 10yr yields lies between 1.95 and 2.14 and that 10yr yields bounced around 1.95 today and currently sit at 1.9671, the broader bond market may have a tough time making any more gains tomorrow and next week if this technical resistance in 10yr yields is telling us the truth.  But in general, we wouldn't advocate trying to get that far ahead of the markets.  Just knowing that 3.875% is "about as low as rates have ever been," is good enough reason to consider this the 3rd good pitch in a row in the batting cage metaphor below (almost unprecedented feat in recent weeks, especially to see the 3rd pitch be the best one).  If the batting cage metaphor isn't your cup of tea, the standard lock/float spectrum graphic follows

The pitching machine/batting cage: Rate offerings from lenders over the past month have been like a temperamental pitching machine in a batting cage-generally getting the ball across the plate, but with no really juicy pitches.  But recently, we've seen some more consistently good pitches (best-ex around 4.0% instead of 4.25%).  Sure... you've seen better, but not by much (3.875% and RARELY 3.75%).  How many more will you count on before calling it a day?  Personally, I'd like to end my batting cage session with a nice hit.  The more "pitches" you wait for with rates already at a 4.0%, the greater the risk that the next pitch will be a curve-ball.  To drop the metaphor, although rates this low CAN go slightly lower, the improvements are fairly minimal compared to how much higher they could go.  Still, if you're not in any particular need to refinance and are operating on a longer-term perspective, we continue to feel good about that "wall" at a 4.25% best-execution level as a good stop-loss point for inclined floaters.  Ask us to explain more about that if it doesn't make sense.