Mortgage Rates Begin Week In Slightly Better Shape

Interest Rates

After ending the previous week with two days in a row of being unchanged, Mortgages Rates begin the current week in slightly better territory.  3.875% Best-Execution is dominant for 30yr Fixed Conventional Loans at the moment, though some lenders are still more advantageously priced at 4.0%.  (read more about Best-Execution calculations).

Today’s improvements were more incidental than driven by any particular market factor.  Trading was slow, volatility was low, and news was scarce this Monday.  Most of the more significant and potentially market-moving events will take place later in the week.  

That said, there are three important events on tomorrow’s calendar that certainly have the potential to move things in a big way.  Retail Sales data will be out in the morning, and a significantly stronger-than-expected number could cause rates to rise marginally ahead of the afternoon data.  

There’s a 10yr Treasury Auction at 1pm, and although we’d be the first to tell you that it’s MBS (“Mortgage-Backed-Securities”) that most directly influence mortgage rates, the strength or weakness in 10yr Treasury Auctions often influences MBS prices.  If the auction is well-received and met with high demand, that would be a positive indication for Treasuries and MBS (more demand for fixed income investments causes their prices to go up and their interest rates or “yields” to go down).

Finally, there’s the Fed Rate Decision, otherwise known as the “FOMC Announcement.”  Most market participants don’t expect anything ground-breaking from the Fed tomorrow, but it always has the potential to move markets.  Even if there are no surprises in the FOMC’s Statement, many market participants will be waiting to be sure of that fact before trading more aggressively in whatever direction they were planning on trading following the day’s earlier important events.  

Indeed, tomorrow may have the most concentrated set of high risk events of the week, but just as we reminded our audience (and ourselves) last week, 

“high risk events” don’t mean the market will necessarily move in one direction or another, simply that greater potential exists for larger-than-average movements.  Sometimes things just end up going sideways too… 

Long story short, yes, there are potential threats to 3.875% Best-Execution, but in general, it hasn’t made much sense to panic about such threats over the past four months as bond markets continue to trade in a narrow range (recall, the MBS that affect mortgage rates are part of the collective “bond markets”).  That said, neither has it made much sense to hold out for Best-Execution rates lower than 3.875%.


  • 30YR FIXED –  balanced between 3.875% and 4.0%
  • FHA/VA -3.75%
  • 15 YEAR FIXED –  3.25%
  • 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
  • There are technical reasons for that as well as fundamental reasons 
  • Lenders tend to get busier when rates are in this “high 3’s” level and can throttle their inbound volume by raising rates or costs.
  • While we don’t necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floating
  • But that will always be the case when rates operating near historic lows
  • (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).

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