Mortgage Rates were slightly higher again today, marking the second day spent pulling back from a nice move lower that followed last week's Fed announcement.  Although mortgage rates aren't directly influenced by the Fed Funds Rate itself, quick changes in the expected course of central bank policy can cause volatility for most any lending rate.  This has been the case over the past 2 weeks.  Rates moved quickly higher after various speeches from the Fed and the European Central Bank earlier this month.

The recent move lower brought rates back into the range that dominated most of July and August.  The past 2 days of weakness haven't been big enough to threaten that range.  The conservative approach would be to consider yourself lucky that rates made it back to current levels and lock accordingly.  The more aggressive approach would be to treat the top of this range as the "warning track" that prompts you to lock at a loss.  You'll know we're crossing it when we talk about top tier conventional 30yr fixed quotes moving back up to 3.5%.  For now, we're still at 3.375%.

Loan Originator Perspective

In hindsight, yesterday was a good day to lock.  Due to weakness this morning, lenders did worsen rate sheets but since that time bonds have managed to rally following the 10 year bounce off of 1.60.  If your lender reprices for the better today, then I think locking might still be the best option.  If your lender does not reprice better today, then i would float over night.   -Victor Burek, Churchill Mortgage

Today's Best-Execution Rates

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

Ongoing Lock/Float Considerations

  • In the biggest of pictures, "global growth concerns" remain the driving force behind the long-term trend toward lower rates
  • Amid that trend, periodic corrections toward higher rates can and will happen.  These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks

  • Time horizon and risk tolerance are 2 variables to consider when it comes to locking.  If you have plenty of time and don't mind losing some ground, set a limit as to how much higher rates could go before you'd lock to avoid further losses, and then float in the hopes of never seeing that limit.
  • In the shorter-term, it's always good to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they've since begun to move back up in any sort of consistent way. 
  • 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).