Although the recently confirmed 3.875% Best-Execution level remains intact for 30yr fixed, conventional loans, Mortgages Rates moved slightly higher today in terms of the costs required to obtain those rates.  Weakness in Treasuries today was more pronounced than MBS, the "mortgage-backed-securities most directly responsible for determining mortgage rates.  (learn more about how we calculate Best-Execution in THIS POST). 

Initially driving today's market movements was news that political leaders would meet in Greece to vote on a soon-to-be-drafted bailout package.  Greek officials have been reluctant to stand up in favor of creditor-imposed austerity.  Even though they likely realize the dire implications of such reluctance, the political backlash from Greece's populace is pretty dire in it's own right.  But that realization has been slow to work its way through markets, which seem to be willing to wait in upbeat anticipation for new developments in Greece that never seem to happen--at least not on time.  

It was the same again today.  Markets were initially upbeat on the promise of ongoing negotiations being concluded.  When we say "markets" in this context, it's more to do with equities/stocks, whereas mortgage rates are part of bond markets.  When markets are upbeat in this way, it decreases the demand for less risky investments such as Treasuries and MBS.  When demand decreases for MBS, prices fall, and that means that lenders will earn less by selling pools of loans on the secondary market, and must raise rates to keep pace with their various cash-flow considerations. 

Even after news came out that the meeting in Greece would not take place until tomorrow, stocks only faltered momentarily, deciding that the nature of the news (no material objections to the proposal on the table, simply a delay in getting it drafted) wasn't enough to reverse the current course.  Bond markets, however, were able to put an end to a somewhat ugly slide weaker.  The damage had already been done as far as mortgage rates would be concerned, but the silver lining is that it only amounted to minimal increases in borrowing costs while most scenarios will still be best-executed at the same rates today as yesterday's.

With the NEW potential resolution on Greek negotiations tomorrow as well as an important 10yr Treasury Auction, there are some sizable risks ahead for mortgage rates, which heretofore have done a good job of holding onto 3.875% Best-Execution through some rough waters.  As always, markets and rates can move in either direction, but we would point out that those movements could be bigger-than-average tomorrow.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Following Friday's employment data, Mortgages Rates moved quickly higher.  In most cases, the changes were seen not in the quoted interest rates themselves, but rather in the closing costs required to obtain those rates.  A small number of lenders' Best-Execution rates rose to 4.0%, but a majority stayed at 3.875%.  (learn more about how we calculate Best-Execution in THIS POST). 

For a given interest rate, there are a range of costs at which it could still be a best-execution candidate.  Whereas Friday basically took these costs from the low side (about as low as they'd even been) to the high side, today's improvements serve to moderate that movement back toward somewhat of a middle ground.  In another way of looking at things, you could think of the past three days as 3.875% best-ex rates being in question on Friday afternoon, but are "safe" once again, at least for today. 

Indeed, "safety" is a relative term.  All we can ever truly know is what rates are available on the day we're looking at them.  Even then, rates can change several times a day.  They don't usually do this more than once a day, but it does happen.  While we don't necessarily expect any violent movements in the near future, we can't ever rule out potential volatility.  In that regard, we can at least identify the events and possibilities that could stand as the culprits for such volatility, in the same way we prepared for Friday's jobs report as a high-risk event. 

Of the high risk events this week, some are scheduled while others are not.  The key scheduled events are the US Treasury auctions this week, particularly the 10yr auction on Wednesday and the 30yr auction on Thursday (these two are more pertinent to the MBS--or "Mortgage Backed Securities"--market which most closely governs mortgage rates).  The other "potential event," is a lingering LACK of resolution to an ongoing debate between Greece and it's bond-holders to determine whether or not Greece will receive it's next lump of bailout funds or face default.  It's actually this uncertainty (Greece defaulting would be bad, economically speaking) that's helping rates bounce back from Friday's jobs data.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

The monthly Employment Situation Report was released at 8:30am this morning, with much better-than-expected results.  Stocks rallied sharply and most every interest rate in fixed-income markets moved higher.  The economic optimism created by this sort of data tends to increase demand for riskier investments like stocks and lower demand for things like fixed-income notes and bonds.  MBS (the "mortgage backed securities" that most directly govern mortgage rates) fall into this fixed-income sector, and definitely weakened following the jobs data.  As a result, Mortgages Rates moved higher at their fastest pace in some time, traversing most of this week's territory, but leaving Best-Execution rates mostly at 3.875%.  (learn more about how we calculate Best-Execution in THIS POST). 

We'd said yesterday that MBS were looking like a runner in baseball taking a "lead-off," waiting to find out whether or not the jobs data would be "a hit."  We went on to say a stronger than expected report would result in MBS simply moving back to the safety of the base to wait for the next pitch.  That's essentially what's transpired today.  Our heroic little base-runner was clearly spooked by the data, and clearly backtracked to previous ground.  But in the process, we see "the base" metaphor emerging as a real possibility, in that markets weakened, but were able to dig in and hold firm after a certain point.  Bottom line, the runner is back on the base, but was not "tagged out," at least not today.

The next pitches will be thrown next week in the form of US Treasury auctions.  While it's true that mortgage rates are based on MBS and NOT on Treasuries, the Treasury Auctions are still a significant event for MBS, especially the longer maturity issues on Wednesday and Thursday.  Things are less certain on Monday and Tuesday, and it's possible rates could be weaker if markets extend today's movements against the backdrop of limited economic data on those first two days of the week.  We'll know a lot more about how longer-term trends are evolving with the passing of at least the first important auction, Wednesday's 10yr Notes.  Between now and then, 3.875% Best-Execution is STILL on the table, albeit at a higher cost than yesterday.  The point is that if you didn't lock yesterday, today is not so much worse that you should just hold off indefinitely.  For those who are taking the risk floating into next week, things could get bumpy, but we'll know a lot more about that on Wednesday. 

On a final note, we have to put out the constant caveat that European headlines do not adhere to a schedule and certainly have the potential to move markets in unexpected ways, by unexpected amounts, at unexpected times.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

For the second day in a row, Mortgages Rates are just slightly better than unchanged.  Best-Execution remains at 3.875% for conventional 30yr fixed loans, and the slight improvements seen today have benefited the borrowing costs required to obtain those rates.   (learn more about how we calculate Best-Execution in THIS POST).  Also in the same vein as yesterday, the stratification between lender offerings continues to lessen, and the improvement in our measurement of rates today reflects that consolidation more than a broad-based movement down in rate.  That said, 3.75% got a bit closer to vying for the Best-Execution crown.

The similarities to yesterday keep on coming...  MBS (the "mortgage-backed securities" that most directly affect mortgage rates) pressed further into all-time highs today, almost like a runner in baseball taking a "lead-off."  In this game, MBS are possibly waiting to find out whether or not tomorrow's important jobs data is "a hit."  If it's weaker than expected, and by a significant enough margin to matter, interest could move lower based on their historical tendencies.  In that case, MBS would be well-positioned to steal the next base, thus helping to make the case for a 3.75% best-execution level.  But if the jobs report is stronger than expected, MBS could simply move right back to the safety of their base and wait for the next pitch.  In this case, the "base" would be the 3.875% best-execution rate for cream-of-the-crop 30yr fixed  loans. 

Now, it's important to keep in mind that markets frequently buck historical trends, in essence, acting opposite the expectation.  So that's another possibility for tomorrow, as well as the less-fun-to-imagine chance that MBS get "tagged out" before getting back to base.  It's hard to imagine a runner that has been as strong and consistent as mortgage-rates have recently been, being dealt a major set-back, but it pays to be ready for anything.  To that end, and without any bias toward what might happen tomorrow, few if any savvy market watchers would find fault in locking an interest rate the day before an influential piece of economic data, when MBS have just traded to their all-time highs.  Some folks might prefer a riskier stance in the hopes of a rate-friendly jobs report tomorrow or some other future chance at a lower rate, but if you're inclined to lock and/or have been on a fence, it's about as good a time as we've seen considering the circumstances.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgages Rates are just slightly better than unchanged on the day.  Best-Execution remains at 3.875% for conventional 30yr fixed loans, and the slight improvements seen today have benefited the borrowing costs required to obtain those rates.   (learn more about how we calculate Best-Execution in THIS POST).  Some of the stratification between lender offerings seems to be lessening now that underlying markets have demonstrated the ability to hold recent levels.  

Particularly, MBS (the "mortgage-backed securities" that most directly affect mortgage rates) recently reached new all-time highs.  The fact that this is occurring at the same time rates are back at new all-time lows is no coincidence.  But it also means that there are some physics-based considerations for MBS prices (higher prices = lower rates).  Of course we're not talking about real physics, but consider the adage "what goes up, must come down."  Now, this isn't a universal truth in bond markets, and certainly it was heard on several occassions over the past 5 months, with everyone who mentioned it turning out to be wrong.  So we're not saying MBS prices are destined to go lower simply because they've hit their all-time highs (meaning rates would likely move higher off all time lows). 

What we ARE saying is that things have never been as good as they are right now in terms of MBS and the rates that lenders are offering.  We certainly don't rule out the possibility that things could get even better, but we'd sure hate to have missed out on this opportunity if they don't.  The comforting caveat is that if things do improve, that progress will likely be slow and potentially limited in scope.

Tomorrow is the last day until Friday's Employment Situation Report (aka "jobs report," or "NFP") brings a high-risk situation into the mix.  NFP, which stands for the the reports chief component "Non-Farm-Payrolls" is generally regarded as the single most important piece of economic data each month.  Even against the current backdrop of European headlines exerting more and more influence on domestic markets, it's immensely important.  Based on where markets sit right now, we think that rates are somewhat vulnerable if the report is better-than expected.  In other words, there's a certain natural level of "push-back" at current rate levels anyway, and a bullish jobs report would probably accelerate that. 

This, of course, is contingent on the report coming in with better-than-expected results.  If the opposite happens, rates could still improve. 

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

After setting new record lows yesterday, Mortgages Rates rose slightly today, though 3.875% best-execution remains intact.  Rather than affect the prevailing rates being quoted, today's weakness is most likely to be seen in the form of slightly higher borrowing/closing costs for the same rates quoted yesterday (learn more about how we calculate Best-Execution in THIS POST).  The increases run counter to today's market movements as well.  

Treasury yields are lower again today, and MBS (the "mortgage-backed-securities" that most directly govern interest rates) are slightly improved as well.  One reason that loan pricing hasn't adjusted to match that fact is that MBS weakened late in the trading session yesterday.  Not all lenders priced that in by issuing adjusted rate sheets, instead reflecting the changes in this morning's rates.  The MBS market was indeed weaker this morning, so if we're comparing the time of day that most lenders put out their first rate sheets, today was indeed worse than yesterday.  Beyond that objective explanation, we also have to consider the fact that continued rate improvements from all-time lows are going to continue to be slow and hard-fought.  Lenders have little incentive to offer lower rates if current offerings are generating more-than-sufficient demand.  (read more on this topic in this previous post)

Finally, and although it's not the only other potential factor, this Friday's Employment Situation Report (aka "jobs report," or "NFP") represents a high-risk situation, ESPECIALLY with mortgage rates at or near all-time lows.  NFP, which stands for the the reports chief component "Non-Farm-Payrolls" is generally regarded as the single most important piece of economic data each month.  Even against the current backdrop of European headlines exerting more and more influence on domestic markets, it's immensely important.  Based on where markets sit right now, we think that rates are somewhat vulnerable if the report is better-than expected.  In other words, there's a certain natural level of "push-back" at current rate levels anyway, and a bullish jobs report would probably accelerate that. 

This, of course, is contingent on the report coming in with better-than-expected results.  If the opposite happens, rates could still improve.  It's just that those improvements would likely be slower and smaller than the losses would be in the opposite scenario.  It's also very much contingent on rates not moving much between now and Thursday afternoon, which may or may not be the case.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

It's happened before and it happened again today: Mortgages Rates hit new all time lows today.  Please note, that the actual interest rate you would have been quoted last week and this week may not have changed, but based on raw data from more than 20 leading lenders as well as feedback from the MBS Live community, the average Best-Execution rate, before rounding to the nearest eighth, hit its lowest level on record, 3.81%.  Although 3.81% is closer to 3.75% than 3.875%, we won't declare 3.75% to be the Best-Execution champ until the average from our lender survey falls to 3.75 or lower, and we're not there yet.  (if the last paragraph is confusing, we went into some more detail on these methodologies in THIS POST).

Last week, we noted a high degree of stratification in rates as lenders responded to the bond market rally at different paces.  This continues to be the case today, but perhaps to a slightly smaller extent.  When we say that rate offerings are more stratified, we're talking about various lenders offering increasingly different rates to the same type of borrowers.  Among some lenders in our survey, best-execution rates are still at 4.0%, while the bulk have moved down to 3.875% and 3.75%.  The important point here is to not believe everything you read about mortgage rates these days, unless the source examines multiple lenders and offers the caveat that they can only report averages while individual experiences may vary. 

For instance, several lenders are priced WORSE today than Friday.  It's far more important to be working with someone you trust in a process that is more likely to hit its deadlines than to go overboard in pursuing the lowest possible quotes.  In the current market, overfocus on lowest possible rates can lead to delays which can result in a higher rate than the one from which you were originally trying to avoid!

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgages Rates continued their march into better territory today, capping a 3 day effort of improvement following Wednesday's FOMC Announcement.  At this point, rates have not only solidified their re-entry into 3.875% Best-Execution levels, but some lenders are once again competitively priced at rates below that (for detail on "best-execution," READ THIS POST). 

That said, we've seen a high degree of stratification over the past 3 days as lenders have responded to the bond market rally at different paces.  When we say that rate offerings are more stratified, we're talking about various lenders offering increasingly different rates to the same type of borrowers.  At a good handful of lenders in our survey, best-execution rates are still at 4.0%, while the bulk have moved down to 3.875%.  But a few outliers now stand at 3.75% with the leaders being quite a bit further away from the laggards than normal. 

This isn't too surprising considering the uncertainty leading up to the FOMC Announcement and the pace of the rally that followed.  Given more time to adjust, lenders will tend to get closer and closer together when underlying markets are stable and always be prone to a but of stratification when markets are on the move (especially when those moves result in shifting Best-Execution rates as opposed to simply minor changes in closing costs).  

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgages Rates over the past two days have done much to make ground lost leading up to Yesterday's FOMC Announcement.  After further improvements today, rates further solidified their reentry into 3.875% 30yr Fixed Best Execution levels.  (for detail on what that means, READ THIS POST from a few days ago).  The rounded average of various lenders' Best-Ex rates had moved up to 4.0%, and more than a few lenders are still well-priced there, but a majority are once again offering 3.875% with attractive borrowing costs. 

Yesterday's FOMC Announcement (Federal Open Market Committee or simply "The Fed") which surprised some market participants with it's inclusion of new verbiage describing how long the Fed anticipated that it would keep its "Fed Funds Rate" at so-called "exceptionally low levels," continues to be the primary driver of the bond market rally.  When the broader bond markets are rallying like this, MBS (the "mortgage backed securities" that most directly affect mortgage rates) tend to rally as well.  Most of the overnight news out of Europe as well as domestic economic reports garnered much less-than-standard levels of attention as markets continued adjusting to the new realities of the Fed's shift in verbiage from "mid-2013," to "late-2014." 

We said yesterday that, while the FOMC Announcement definitely helped rates break recent trends at 4.0% Best-Ex, it would be up to the rest of the week to solidify the rebound.  Cross the first half of that task off the list...  4.0% Best-Ex is increasingly looking like an outlying exception to a broader trend at 3.875%.  (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 this low, 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).

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgages Rates spent 2 days at 4.0% in terms of rounded average "Best-Execution" rates (for detail on what that means, READ THIS POST from a few days ago).  Today, that rounded average has returned to 3.875%.  Although the underlying average isn't as low as it's ever been (3.88 vs 3.82), lenders tend to price loans in 1/8th (.125%) increments, meaning that 3.875% has been the lowest sustainable best-execution rate.  In short, we're back to the promised land. 

The improvements came on the heels of today's FOMC Announcement (Federal Open Market Committee or simply "The Fed") which surprised some market participants with it's inclusion of new verbiage describing how long the Fed anticipated that it would keep its "Fed Funds Rate" at so-called "exceptionally low levels."  Until today, this verbiage read "through mid-2013," but is now changed to "through late-2014."  Markets weren't necessarily expecting the inclusion of the word "late," and although mortgage rates would have likely improved with a simple mention of 2014, the "late" part added fuel to that fire.  

While this indeed breaks the sideways trend at higher rates over the past 2 days, it's up to the rest of the week to solidify the rebound.  In essence, markets will have an opportunity to respond to the eternal question: "is that your final answer."  While the data through the end of the week doesn't possess the gravity of today's FOMC announcement, it could be enough to nudge the Best-Execution rate back to 4.0% depending on how it's received.  In that sense, the risk posed by one singular event today is replaced by the risk posed by a group of events tomorrow and Friday.  3.875% is just barely back in the picture today, but it's too soon to say whether or not the past two days at 4.0% were the exception to a long-term trend, or the beginning of a new one. 

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgages Rates are steady to slightly improved today after rising for the first time in a month yesterday.  Although rates change slightly every day, those changes are usually small enough as to only effect the closing costs associated with a particular rate.  Because of this, we track "Best-Execution" as the actual interest rate benchmark, and we talked about it in significant detail yesterday (READ MORE).  So although we are able to report that the rate environment is slightly improved today, those improvements have been mostly relegated to minor decreases in borrowing costs for what will likely be the same rate you would have been quoted yesterday. 

Underlying markets have been fairly equivocal for the past two days with a majority of the damage to mortgage rates having occurred with last week's market movements that lenders more fully priced into rate sheets yesterday.  Stocks, Bonds, and MBS (the "mortgage-backed-securities" that most directly influence mortgage rates) are all very close to where they were last night, seemingly in preparation and anticipation of several important events tomorrow. These include the FOMC Statement (Fed "rate decision," although it's the text of the announcement that is important as no change is expected to the discount rate), the first-ever release of FOMC members forecasts, a post-announcement press conference from Ben Bernanke, as well as the 5yr Treasury Note auction. 

Tomorrow's events, taken in conjunction with tonight's State of The Union address presents quite a bit for mortgage markets to digest.  The speech tonight may contain mention of new housing-related initiatives (some have suggested), and similar suggestions have been made about tomorrow's FOMC Announcement (which would be a MUCH bigger deal as far as influencing mortgage markets).  Conversely, it's possible that some recent levity for MBS vs Treasuries is due to the EXPECTATION that the Fed will add some extra MBS-Specific quantitative easing in the near future, meaning that rates could face some added pressure if MBS are NOT specifically mentioned, although that's not likely to cause sufficient movement tomorrow for Best-Execution to rise.  Whatever happens tomorrow, it's a high-risk set of events that could push rates higher OR lower, but we'll hopefully come away from it with a clearer sense of whether or not rates will make it back down to a 3.875% Best-Execution any time soon.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

For the first time in over a month, the Best-Execution rate for 30yr fixed mortgages rose from a rounded average of 3.875% to 4.00% today.  The underlying borrowing costs associated with 3.875% didn't rise by a significantly painful amount, but the small increases across the board, combined with one huge move by a huge lender, was enough to bring the average rate closer to 4.0% than 3.875%.   

You may well wonder what the heck this all means.  So we'll go into more detail tonight for enquiring minds.  Our methodology for determining daily Mortgage Rates is somewhat complex, and involves an objective component based on lenders raw prices as well as subjective impression from our network of originators.  We look at the rate sheet offerings from most major lenders and calculate the buy-ups and buy-downs between each rate (incidentally, rates tend to be offered in .125% increments, which is why we're always conveying best-execution in .125% increments whereas the actual daily average is reflected on the Mortgage Rates page). 

Sometimes, the "sweet-spot" is obvious from looking at lenders raw pricing.  For example, For each .125% lower in rate, you'd have to pay more and more in terms of closing costs (which could be referred to as "discount" or "origination" or "points" among other things, but I'd greatly like to stay out of semantics debate and instead focus on the spirit of the matter.  Bottom line: it costs more money up front to pay a lower rate over time, whatever a lender wants to call that fee).  If it cost 0.4% of the loan amount to move down from 4.125% to 4.0%, another 0.5% to move to 3.875%, but a whopping 1.2% to move to 3.75%, it's clear that this lender's Best-Execution is at least 3.875%.  In some cases, some clients may opt to pay big buydowns if they understand the longer time it will take to breakeven on the extra upfront expense in terms of monthly payment savings from an .125% lower rate. 

Other times, the gaps between rates are fairly close together for several rates near Best-Execution.  This makes the process of deciding that lender's Best-Ex rate much more subjective.  In these cases, we assume scenarios with the best combination of lowest closing costs but not at the expense of monthly interest savings that could be recouped in less than 5 years.  This almost always means a loan with no origination fee.  But when the range of options are similarly viable, we involve the community to get a consensus not only of what they're quoting, but also which options their clients are choosing.  This is combined with the objective measurements taken from lenders, and each lender's best-ex rate goes into calculating the average.

All that to say that this average moved up from 3.92% to 3.98% today.  3.92 rounds down to the closest eighth whereas 3.98 rounds up, thus, the 4.0% Best-Execution today.  But keep in mind that 3.875% is still very much "out there," meaning, deals can be viably structured with 3.875% rates just as easily today as they could have been on Friday, as long as you can afford the increased closing costs.  Also keep in mind that different lenders are continuing to price in the effects of the Tax-Cut-Extension at different times and in different ways.  One large lender priced it in with today's rates and the difference in closing costs would be substantial if you didn't know where they were coming from.  But the tax cut extension calls for a 10bps increase to a fee that lenders have to pay the government on each loan.  That 10bps fee is like 0.1% interest rate increase, almost as much as the .125% increments we just discussed!  So just like moving up and down by .125% increments in rate affected the costs by .4, .5 and even 1.2% of the loan amount, you can see how a difference of 0.1% being priced in overnight could have a drastic effect on closing costs on a particular loan depending on the lender and the initial rate.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgage Rates moved higher again today, albeit by a relatively small amount on average.  But averages only tell part of the story.  We're seeing the same phenomenon of increasingly divergent rates between lenders crop up that we saw when the last major shift down in rates was happening, only this time it isn't so much motivated by a currently shifting market as it is by a POTENTIALLY shifting market  The various methodologies for implementing the recently imposed Fannie/Freddie Guaranty Fee Increase are no doubt playing a part as well. 

Whatever the underlying cause might be, what you need to know is that rates have been increasingly different from lender to lender.  Furthermore, some lenders' positioning in the market relative to other lenders has changed drastically in recent weeks.  Some market leaders are now "mid-pack" at best, while some from the mid-pack are now in market-leader territory.  Rate diversity notwithstanding, the recent weakness might be cause for some concern if you'd been floating and waiting.  While there still are a few lenders where 3.75% is a potentially logical a Best-Execution rate for some, at other lenders, 4.0% could make more sense today. The average remains at 3.875% when rounded to the eighth, but the underlying numbers have been steadily on the rise.

All the fuss seems to be centered on the combination of several events in the week ahead, including the FOMC Announcement (Fed Rate Decision and official statement), which is likely the markets focus, in addition to keeping an eye out for potential headlines out of Europe.  There are a few other considerations beyond these that could be prompting a bit of defensiveness in the interest rate environment, including another round of US Treasury Auctions.  What's important here is that markets are heading to central ground, gearing up for a slightly bigger move in one direction or the other.  There's no way to know for sure which direction that will be, and while we wouldn't think that today is the last time we'll ever report on a Best-Execution rate in the high 3's, the small chance that it is, could be enough of a motivation to protect against that eventuality.  In other words, if you didn't lock earlier this week, the market is trying to force your hand.  You either have to cut your losses or be forced to play a risky game next week.  Tough call either way.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgage Rates worsened at a reasonably brisk pace today when compared with recent relative stability.  Still, the movement remains confined to costs associated with as yet, unchanged Best-Execution Rates.  That means that 3.875% is still the average "best-case-scenario and best bang-for-the-buck" rate among most lenders rounded to the nearest eighth.  3.75% had been increasingly attractive last week, but has all but faded from view after lenders released rates weaker this morning.  Several lenders recalled those rates, raising costs as bond markets suffered.

Over the past few days, we've included the following in our analysis:

Rates are as low as they've ever been.  How long will this continue?  There's no way to know for sure, but we generally advocate a conservative approach with rates at all time lows.  "Conservative" in this sense simply means that history has shown us how quickly record-low rates can disappear.  While we certainly wouldn't rule out the possibility that rates can improve, we've already been experiencing the fact that further gains are hard-fought and take more time than gains seen in the middle of the range. 

If you happened to read that, taken in conjunction with several days of weakness, you may be wondering if these are the days that mark the turning point away from all time low rates.  The great thing about such a concern is this: rates are still at all time lows!  If you're worried that current weakness could mark the turning point, the sacrifice of slightly higher closing costs vs yesterday seems minimal compared to the loss of the opportunity altogether. 

If losing the opportunity doesn't bother you much, just be sure to clearly define an acceptable level of loss from current rates.  Set yourself a "stop," of sorts, by deciding on a rate slightly higher than what you're currently being quoted, at which you'd lock at a loss if the market moves against you.  Locking in such a scenario can prove exceedingly frustrating more often than not as the higher probability eventuality has been for rates to return lower, but this pales in comparison to the potential frustration of rates NOT returning lower.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgage Rates continue to ebb and flow in the same pattern that has persisted for over a month.  The average Best-Execution interest rate for a 30yr fixed loan has remained at 3.875% during that time and the closing costs associated withtthat rate have been gently rising and falling, with increasing regularity.  We've rarely strung together 3 days in a row with movements in the same direction (i.e. borrowing costs rise very slightly 3 days in a row, while Best-Ex stays at 3.875%), and the actual difference in those costs day over day continues to be fairly minimal.

Those borrowing costs rose very slightly today, a reasonable conclusion to the previous two sessions offering all time low rate/fee combinations.  This means that whereas 3.75% was "as close as it's ever been to sharing equal recognition with 3.875% as a viable choice for Best-Execution," that's no longer the case today, but it should be noted that the buydown schedule (amount of additional closing costs required to move down in rate) at some lenders allows for scenarios with even lower rates to make sense depending on your preferences and qualifications.

If you didn't catch Friday's Article, which went into a bit more detail on how we determine "Best-Execution," it's worth a read.  But the bottom line is really this: regardless of the actual interest rate levels, there's no other way to say the following: rates are as low as they've ever been.  How long will this continue?  There's no way to know for sure, but we generally advocate a conservative approach with rates at all time lows.  "Conservative" in this sense simply means that history has shown us how quickly record-low rates can disappear.  While we certainly wouldn't rule out the possibility that rates can improve, we've already been experiencing the fact that further gains are hard-fought and take more time than gains seen in the middle of the range. 

Whatever your disposition toward locking vs floating, it makes sense to set yourself a "stop," of sorts, by deciding on a rate slightly higher than what you're currently being quoted, at which you'd lock at a loss if the market moves against you.  Locking in such a scenario can prove exceedingly frustrating more often than not as the higher probability eventuality has been for rates to return lower, but this pales in comparison to the potential frustration of rates NOT returning lower.

Today's BEST-EXECUTION Rates

Ongoing Lock/Float Considerations

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Bankrate.com: Mortgages Headlines
Rates, analysis and mortgage-hunting tips

Winner or loser: Mortgage shopper
18 Sep 2009 at 6:00am
Rate changes by the Fed can affect consumers' budgets. Here's how the Fed's announcement affects mortgage shoppers and ARM holders.

Winner or loser: Home equity loans
18 Sep 2009 at 6:00am
Rate changes by the Fed can affect consumers' budgets. Here's how the Fed's announcement affects home equity loans and lines of credit.

Winner or loser: Auto loans
18 Sep 2009 at 6:00am
Rate changes by the Fed can affect consumers' budgets. Here's how the Fed's announcement affects auto loan rates.

Winner or loser: Credit cards
18 Sep 2009 at 6:00am
Rate changes by the Fed can affect consumers' budgets. Here's how the Fed's announcement affects credit card interest rates.

Debt forgiveness for homeowners?
30 Jul 2009 at 6:00am
Researchers say debt forgiveness is the only way to fix the housing crisis. But will it?


Newsfeed display by CaRP