Mortgage rates moved lower today, largely because they needed to get caught up with yesterday afternoon's movement in bond markets.  As a reminder, mortgage rates are most directly affected by mortgage-backed-securities (MBS), which tend to move in the same direction as US Treasuries.  Both MBS and Treasuries improved significantly after yesterday's Fed announcement, but lenders have been cautious in adjusting rate sheets to match market movements for a variety of reasons.  When they saw markets were still in good shape when it came time to send out this morning's rate sheets, lenders had a bit more love to share.

As such, we find ourselves well into the lowest rates in more than three years, even if the pace of improvement is lagging the drop in US Treasury rates.  For what it's worth, 2016's mortgage rate improvements have kept up with Treasuries much better than in 2012--the last time markets were moving abruptly for somewhat similar reasons.  The average lender is now down to 3.5% in terms of conventional 30yr fixed quotes for top tier scenarios.  Further improvements from here will be hard fought, so it makes good sense to consider locking to avoid a temporary pull-back ahead of next week's vote on the British referendum on remaining in the European Union.  

Loan Originator Perspective

"Treasury yields continued their downward march today, and mortgage rates hopped on for the ride. My pricing improved about 25 bps on most loans, and we're now approaching the lowest rates in several years. EU turmoil and the Fed's benign view on inflation seem destined to keep rates down for some time. I'm locking loans near closing, but floating those just headed to underwriting, provided borrowers approve. The trend is our friend! "  -Ted Rood, Senior Originator

Today's Best-Execution Rates

• 30YR FIXED - 3.5%
  
• FHA/VA - 3.25%-3.5%
  
• 15 YEAR FIXED - 2.75-2.875%
  
• 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

• Markets had been primarily concerned with the timing of the Fed's second rate hike (after they first hiked in December 2015)

• The possibility that the U.K. would vote to exit the European Union (Brexit) has since taken over as the biggest flashpoint for markets. 
  
  
• The Fed freely admits it didn't hike in June because of this and because it wants to be sure that jobs numbers aren't taking a bigger turn for the worse.  Mortgage rates moved farther into 3-year lows as a result.
   
• If the UK votes to remain in the EU and if the next jobs report is strong, watch out.  Between now and then, volatility will be elevated and improvements in rates will be slow in coming (which is always the case when we're at long-term lows).  These have historically been good opportunities to lock, despite the longer term momentum remaining positive. 
   
• 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).