Mortgage Rates Flat to Slightly Improved After Auction, Greece News

For several sessions in a row, Mortgages Rates
have moved in the opposite direction from the previous session,
although even the bigger examples of these movements haven’t been enough
to nudge 3.875% out of the “best-execution” position.  The same
back-and-forth movement continued today as rates improved ever so
slightly after rising slightly yesterday.  Keep in mind, that the term
“rates” in this context refers to the combination of the interest rate
itself and the closing/borrowing costs required to obtain that rate.  We
explain more about Best-Execution calculations in THIS

Also in the same vein as yesterday, today’s market movement began in
reaction to headlines surrounding Greece’s ongoing negotiations with
creditors (the 3 official creditors, the ECB, IMF, and European
Commission are collectively referred to as “The Troika”) regarding
current bailout efforts.  The circulation of a draft agreement of the
Troika’s terms, which was delayed yesterday, was quickly forgotten this
morning after news broke that the ECB might work a 3-way deal between
Greece and the EFSF (which is the EU “Bailout Fund,” sort of like TARP
was to the US), that would ultimately leave Greece with €11 billion less
debt, while the ECB would walk away having stuck to their guns and the
EFSF would foot the bill.  If all that stuff sounds confusing, that’s
because it is.  It’s also, unfortunately, one of, if not THE biggest
source of movement for mortgage rates in the US.  Good times…

The US 10yr Treasury Auction was also an important event from today,
and it didn’t seem to indicate a great deal of optimism that that
current goings on in Europe would do anything to fundamentally alter the
very scary bigger picture.  The reason we say that is because there
were more than three dollars bid for each of the $24 billion auctioned
today, slightly higher than the historical average, and those bids were
satisfied earning as little as 2.02% on 10yr loans to the US
Government.  That’s just not the sort of thing that has ever happened
until markets became increasingly concerned about a Euro-Zone meltdown.

The generally low Treasury yields provide an ideal environment for
generally low Mortgage Rates, though we’re fond of reiterating that
Mortgage Rates are not based on Treasuries.  Although Treasuries and MBS
(the “mortgage-backed-securities” that most directly govern rates) are
often moving in the same direction, the magnitudes of that movement can
vary, and sometimes, they can move in different directions.  The trading
day isn’t over yet, but at several times today, MBS have been lower in
yield while Treasuries have been higher, thus the slightly improved
mortgage rates.


  • 30YR FIXED –  3.875% mostly, few 3.75’s and 4.0’s
  • FHA/VA -3.75%
  • 15 YEAR FIXED –  3.25%
  • 5 YEAR ARMS –  2.625-3.25% depending on the

Ongoing Lock/Float Considerations

  • Rates and costs continue to operate near all time best
  • Current levels have experienced increasing resistance in improving much from
  • 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
  • (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).