Mortgage rates moved lower for a 2nd straight day.  This helps undo virtually all of the damage done by the first 3 days of the week.  In other words, today's rates are right in line with last Friday's after having been noticeably higher for the past 4 days.  There were no significant economic reports or market-moving headlines today as markets were instead focused on limiting their exposure to volatility over the upcoming 3-day weekend.  On that note, keep in mind that banks and most mortgage lenders will be closed on Monday for the Presidents Day holiday.

4.25% remains the most prevalent conventional 30yr fixed rate on top tier scenarios, although a handful of lenders moved back down to 4.125% yesterday and today.  Borrowers being quoted the same "note rate" as yesterday are seeing today's improvement in the form of slightly lower upfront costs (or a bigger upfront credit, depending on the scenario).

Loan Originator Perspective

Bonds retained yesterday's gains through mid day today, even adding to them slightly.  Our pricing improved by roughly 25 bps overnight, which is always welcome on the cusp of a 3 day weekend.  Keep in mind we're still range-bound, but now nearer rates' floor than ceiling.  Today looks like a great locking opportunity to me.  The odds of rates bouncing back up next week seem far higher than those of heading further downward. -Ted Rood, Senior Originator

I am rarely a fan of locking ahead of a 3 day weekend.   Bonds are testing the low end of range and with the 3 day weekend ahead, I feel lenders will be conservative on pricing.  I favor floating over the weekend to see if this rally can continue. -Victor Burek, Churchill Mortgage

Barring a late day sudden sell off it looks like floating is the way to go.  We’ve been basically sideways for three months now.  Playing the range trade with lock and float decisions has worked out very well for those paying attention.  I’d continue to do the same until something changes.  -Jason B. Anker, Vice President- Loan Officer at Salem Five

Today's Best-Execution Rates

  • 30YR FIXED - 4.125-4.25%
  • FHA/VA - 3.75-4.25%
  • 15 YEAR FIXED - 3.375-3.5%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates had been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election
  • Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm

  • With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to return to pre-election levels until well after Trump takes office.  Rates can move for other reasons, but it would take something big and unexpected for rates to get back to pre-election levels. 
  • We'd need to see a sustained push back toward lower rates (something that lasts more than 3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers. 
  • 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, conventional 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).