Mortgage rates returned to levels best characterized as "under 4 percent" today after drifting higher on Friday.  Last Wednesday was the first foray into the "high 3's" in more than 16 months.  Not every scenario will be seeing those high 3's today, but for top tier borrowers, 3.875% is slightly more prevalent today when it comes to conforming 30yr fixed rate quotes.  4.0% is a close runner-up, but 3.75% may be a viable option for borrowers interested in paying higher upfront costs.

Today's modest recovery suggests that we're in the midst of a few days of limbo relative to the bigger picture.  Historically, after a big swing down in rate followed by a big snap back (like that seen last week) there has been a time frame of a few days or even a few weeks of comparatively smaller changes before rates embark on their next noticeable move.  That means that long-term optimists can keep hope alive for further gains, but also that there's a risk they won't materialize.  In any event, it won't be long before we know one way or the other. 

It also means that both locking and floating can be justified at the moment, and neither is necessarily a bad choice.  It's worth noting, however, that today's rates are right in line with the second best day in over 16 months.  If you missed out on last week's sub 4% rates, here they are again.

Loan Originator Perspective

"Our long term trend towards lower rates still looks intact, at least for the moment.  Close to closing? Lock while pricing is great. Have a month or more to closing? Can float if you're willing to accept some risk, and if you have a responsive loan officer who tracks MBS movement." -Ted Rood, Senior Mortgage Originator

"Today's action (or lack there of) is a good sign as we start to establish a new range for interest rates to trade.  I'm only locking loans that are cleared to close, or for clients who insist on locking. Better rates are coming to close out the year." -Constantine Floropoulos, Quontic Bank

"Rates could easily move higher or lower from our current location and there is no specific guidance to give us a strong indicator which direction is next. Locking secures some of the best pricing we've seen in the last 18 months, while floating risks losing it in hopes of the best rates in 2 years. To me, locking is the smartest decision as securing the lowest rates in a year and a half seems like a smart move." -Brent Borcherding, brentborcherding.com

"Not much going on this week in terms of economic data so bonds and mortgage rates will probably respond to stocks and maybe geopolitical dynamics this week. For now it seems calm so floating cautiously with your speed dial programmed to your loan officer is probably okay. As we know from recent experience (a week ago), things can change rapidly these days." -Hugh W. Page, Mortgage Banker, Seacoast National Bank

"Mortgage bonds have been trading sideways the last few sessions as traders appear to be in wait and see mode.  I'm currently in the float camp for longer closing timelines, shorter term caution should be exercised." -Manny Gomes, Branch Manager Norcom Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 3.875 (3.75 and 4.0 also viable)
  
• FHA/VA - 3.5
  
• 15 YEAR FIXED -  3.125
  
• 5 YEAR ARMS -  3.0 - 3.50% depending on the lender

Ongoing Lock/Float Considerations

• The hallmark of 2014 has been a narrow range in rates.  Too many market participants bet on rates going higher in 2014, and markets punished that imbalance with a paradoxical move lower.
  
  
• European markets helped that process along and continue to play a prominent role in keeping US rates lower than they otherwise might be.  

• For most of the Summer and early Fall months, rates held a narrow range of 4.125% -4.25% (essentially where the 2014 rate recovery has bottomed out) and finally broke to a 3.875%-4.0% range in mid-October.  It's too soon to tell if this is a brief window of opportunity or the continuation of 2014's very gradual improvements.
  
  
• As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).