Mortgage Rates improved moderately today bringing them just barely into new all-time low territory.  Some lenders released 2nd and even 3rd rate sheets today with improved pricing and the 3.625% Best-Execution level is beginning to looks more and more like it will share the stage with 3.5% if current pricing is maintained.  For now, 3.625% is still dominant, but some of the more aggressive lenders are arguably at 3.5% for Conventional 30yr Fixed Best-Execution.

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

Pricing improvements came today partly due to bond markets holding slight gains versus Friday's latest levels.  MBS (the mortgage-backed-securities that most directly influence lenders' rate sheets) are part of bond market and normally trade in the same direction as US Treasuries though often by varying degrees.  Today was no exception with a fairly calm and mildly positive morning (positive = slightly lower in yield or rate).  

 See Rates from Lenders in Your Area

The calm was interrupted for markets to react to a much weaker-than-expected report on the Manufacturing sector that showed the first instance of shrinking activity since July 2009.  Bond markets took all off a few short minutes to dash lower in yield, but again resumed their calm, sideways patterns after the adjustment.  The report was the most significant piece of economic data until after markets return from a day off on the 4th.

However abrupt the market movement may have been after the report, it's important to note that it was consistent with the ongoing theme that we began to reiterate last week, which is this: 

"we're feeling less and less like rates are cutting this narrow, converging path because they're ready to break quickly to one direction or another and more like rates are just really low, really sideways, and will take a lot of convincing before doing something else.  In other words, we're planning on "low and sideways" around current levels until something big happens to change that.  All we can do is watch and wait for such things and keep an eye out for upcoming candidates to motivate the potential movement.  

Unless something carries us out of this low, narrow range before then, we're only feeling especially defensive about the Employment Situation Report on Friday morning.  If rates are at or near all-time lows on Thursday afternoon, it would be hard to advocated doing something other than locking those in.  

Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty.  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

Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage

Mortgage rates continue to drop, and today is no exception. I'm using the improved rates to cover even more of my clients' closing costs and escrows. My borrowers and I always have the "lowest rate is not necessarily the best deal for you" conversation early in the loan process. If an 1/8th higher rate saves us thousands in closing costs, it's often the prudent move, especially with rates as ridiculously low as they are.

Jeff Statz, Network Funding L.P.

There is still much to discover for news and data this week, but if your closing is around the corner, locking is a safe bet today.

Victor Burek at Benchmark Mortgage

If you floated over the weekend, you were rewarded with great rates this morning. If within 15 days of closing, go ahead and lock...everyone else should continue riding the float boat.

Today's BEST-EXECUTION Rates 

  • 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).