Mortgage Rates suffered their worst losses of the week today as light volume and low participation left sellers in control, driving benchmark interest rates higher.  When we talk about "sellers," it's in reference to sellers of fixed-income securities in bond markets.  The Mortgage-Backed-Securities (MBS) that most directly influence mortgage rates are part of the broader bond markets and tend to move in the same direction as the most popular bond: 10yr Treasury Notes.  When sellers outnumber buyers, prices get lower and lower, bringing yields (aka: interest rates) higher.  This is happening fairly rapidly for Treasuries, but to a lesser extent for MBS (and consequently lender's rate sheets).  Best-Execution 30yr Fixed rates STILL haven't moved higher, but closing costs are quite a bit higher at many lenders today.

What we said yesterday: "Low volume and year-end lack of participation continue to distort movements in the secondary mortgage market.  The lower a market's volume, the more weight carried by those who participate meaning that it takes fewer trades/less money to move things around.  In general, MBS (mortgage-backed-securities) have pitched and rolled less (for better or worse) than their Treasury counterparts."

Please make sure to read the "important rate disclaimer" at the bottom of the page in considering what "all-time lows" means.  The issue of "buckets" as described in the lock/float considerations below, remains a factor that may prevent rates and/or fees from moving significantly lower in the short term.


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

Lock/Float Considerations

The paragraph below is unchanged (except to update "today" to "yesterday") because it's exactly what we'd choose to say today.  One other consideration is this: even though we can look at rates suffering here today and be somewhat dismissive in saying "sure, costs are higher, but it's just due to low volume," doesn't mean that something meaningful won't have come along by the time volume picks back up that actually DOES justify current levels.  In other words, being able to chalk the weakness today up to low volume is only going to make you sound smart in explaining things to friends whereas ACTING to PROTECT yourself might actually make you feel smart if rates do happen to move higher in the new year.  We're not saying that will necessarily be the case, simply that 3.875% is still the best-execution rate, it's been historically tough to move much lower, and we probably won't have a solid idea whether or not that will continue to be the case until the new year.

As noted in the previous post, in many regards yesterday was essentially the last trading day of the year.  Despite the predisposition toward volatility at times like this, rates have been holding admirably steady.  Even so, the ongoing low volume environment through the new year still constitutes more of a risk than a benefit as far as Mortgage Rates are concerned.  To be clear, we're not saying any fundamental negativity is sweeping over the interest rate landscape, simply situational risk.  Keep in mind that rates are about as low as they've ever been and moving more than .125% lower from here will not be easy or fast.

Happy Holidays and we'll see you next Tuesday