Mortgage Rates were nearly unchanged to slightly higher depending on the lender in question.  The pre-rounded average from our best-execution calculation barely budged today and only moved on the rates page due to crossing over the mid-point and rounding to the next 0.01 higher.  Lenders' rate sheets have been fairly diverse recently, but took steps to become less stratified today.  In other words, rates between lenders grew more similar, and 3.625% continues to be the current Best-Execution rate for Conventional 30yr Fixed loans.

(Read More:What is A Best-Execution Mortgage Rate?)

There's not much to add to yesterday's analysis (get caught up HERE) considering that mortgage rates are unchanged and the underlying MBS (mortgage-backed-securities) market was relatively flat in today's trading.  Clearly, many markets are circling the wagons in preparation for tomorrow's FOMC events.  Those include the Fed's standard policy announcement as well as updated forecasts from FOMC members and Bernanke's press conference.

For the first time in several months, markets are not in agreement about exactly what those events will look like, but certainly a greater number of analysts, economists, and market participants are entertaining the possibility that the Fed says "something new."  Granted, the Fed says something new with every FOMC Announcement, but in recent examples, the "new stuff" has been fairly lightly reworded versions of previous points.  

What's at stake here is the possibility of an entire new addition to the text from the last announcement.  It could range anywhere from an indication that the Fed is "ready" to embark on whatever the "new stuff" is, or even go so far as to begin the "new stuff" at a specified date.  Even then, "new stuff" has a wide range of eventualities.  We could be looking at a mere extension of previous "Operation Twist" policies vs the announcement of an as yet unused policy tool.

We could even see relatively no change to the announcement!  Even though we doubt the Fed simply ignores the recent degradation of economic data, we're also not sure that things have gotten quite bad enough for them to announce "new stuff," and sort of see the limits at them announcing the extension of "old stuff," or a contingency plan on "new stuff"  (i.e. they'll more clearly specify impending policy actions IF things get worse).  Whatever the case, this is generally not a friendly environment for mortgage rate watchers inclined to float--mainly because rates are at all times lows and there's a big potential market mover ahead that could take them either a tiny bit lower in the short term or a moderate amount higher.

Long Term Guidance: We'd continue to advocate not trying to "get ahead" of current market movements as a high degree of uncertainty is pervasive.  While it's a reasonably safe assumption that European concerns will generally help rates stay lower than they otherwise would be, that "otherwise would be" part is very much a moving target.  Best bet is to focus on the fact that rates are at their all time lows, and can change quickly based on events that aren't "scheduled" or able to be forecast.  Risk vs reward for floating vs locking looks a bit larger than we'd like, but not out of the question for those who understand the risks and have an exit strategy if things don't go their way.

Loan Originator Perspectives

Jason York, Vice President of VA Operations at Prime Mortgage Lending, Inc

I would say there is a lot more to gain, and a lot less to lose by locking in before FOMC tomorrow. Sometimes the safe route is the best route!

Victor Burek, Benchmark Mortgage

Fed meeting is upon us and it is always risky floating through there announcement. If i was closing in the short term, i would be locking as rates today are as almost the best ever. Long term, i continue to believe lower rates are ahead. I think tomorrow, the Fed announces an extension of Operation Twist and mbs move higher...but that doesn't mean lenders pass along better rates immediately.

Consantine FLoropoulos, Quontic Bank

The environment is too unpredictable, even with the recent strength in MBS & US Treasuries we have not seen a significant benefit to rates or spreads. Our position is the same, if closing in the next 21-30 days floating is not worth the risk. Longer term scenario's have intrinsic value (time) to float into a "high risk" event. We also feel that MBS have "stored energy", due to the lagging of MBS prices vs Treasury prices during the recent drop in yields (interest rates on benchmark US Treasury Bonds), therefore floating on loans closing +30 days is not of significant danger in our opinion. Refinances must be more conscious of movement as an 1/8 to 1/4 difference in rates may make the refinance not worth the time. Lastly, based on the recent trends, we do not expect anything Mr. Bernanke has to say to affect rates in the near term negatively, and quite frankly feel the uncertainty in Europe is the larger market mover for interest rates. That and the fact that we are entering the summer (slow trading and lower volume), we feel if you want to risk it all, you should be safe until the end of August. But our guess is as good as yours!

Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage

I'm locking newly ratified purchase clients (and some refi clients who've been holding for even lower lows) before the Fed meeting to avoid "buy the rumor, sell the news" MBS trading scenario. In English, that means MBS have been bought to near-record highs (pushing rates to near-record lows) ahead of a Fed meeting where it's expected that the Fed will commit to buying more MBS. Even if they do, or especially if they don't, a lot of this is likely to be priced into MBS already.

Bob Van Gilder, Finance One Mortgage

FOMC (Federal Open Market Committee) is meeting today and tomorrow. They typically release a statement at 11:15 am PST regarding their "take" on the economy. There seems to be some bullishness for another round of easing (QE3). My take: WHO CARES?? Rates remain at historic lows. If you have patience, now is the time to take advantage of current rates. There are now programs available that can make a significant impact on a lot of borrowers economic future. But, you must act.

Mike Owens, Partner with HorizonFinancial, Inc.

Lock Lock Lock. No reason to play with fire.


  • 30YR FIXED -  3.625%
  • FHA/VA -3.5% - 3.75%
  • 15 YEAR FIXED -  3.00%
  • 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
  • Rates could easily move higher or lower, but given the nearness to all time lows, there's generally 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.
  • (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).