Mortgage Rates moved higher again today, albeit by a relatively small amount on average.  But averages only tell part of the story.  We're seeing the same phenomenon of increasingly divergent rates between lenders crop up that we saw when the last major shift down in rates was happening, only this time it isn't so much motivated by a currently shifting market as it is by a POTENTIALLY shifting market  The various methodologies for implementing the recently imposed Fannie/Freddie Guaranty Fee Increase are no doubt playing a part as well. 

Whatever the underlying cause might be, what you need to know is that rates have been increasingly different from lender to lender.  Furthermore, some lenders' positioning in the market relative to other lenders has changed drastically in recent weeks.  Some market leaders are now "mid-pack" at best, while some from the mid-pack are now in market-leader territory.  Rate diversity notwithstanding, the recent weakness might be cause for some concern if you'd been floating and waiting.  While there still are a few lenders where 3.75% is a potentially logical a Best-Execution rate for some, at other lenders, 4.0% could make more sense today. The average remains at 3.875% when rounded to the eighth, but the underlying numbers have been steadily on the rise.

All the fuss seems to be centered on the combination of several events in the week ahead, including the FOMC Announcement (Fed Rate Decision and official statement), which is likely the markets focus, in addition to keeping an eye out for potential headlines out of Europe.  There are a few other considerations beyond these that could be prompting a bit of defensiveness in the interest rate environment, including another round of US Treasury Auctions.  What's important here is that markets are heading to central ground, gearing up for a slightly bigger move in one direction or the other.  There's no way to know for sure which direction that will be, and while we wouldn't think that today is the last time we'll ever report on a Best-Execution rate in the high 3's, the small chance that it is, could be enough of a motivation to protect against that eventuality.  In other words, if you didn't lock earlier this week, the market is trying to force your hand.  You either have to cut your losses or be forced to play a risky game next week.  Tough call either way.


  • 30YR FIXED -  3.875%, 3.75% as close as it's been
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.375% / 3.25%
  • 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates and costs continue to operate near all time best levels
  • Current levels have experienced increasing resistance in improving much from here
  • There are technical reasons for that as well as fundamental reasons
  • Lenders tend to get busier when rates are in this "high 3's" level and can throttle their inbound volume by raising rates or costs.
  • While we don't necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floating
  • But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.