Bond markets rallied heavily today and Mortgage Rates continued to improve.  Most of the gains were seen in the form of lower borrowing costs today, but some of you may see another eighth lower in rate.  On average, rates are in line with all time lows.

Today's Rates: 

• BESTEXECUTION 30YR FIXED -   Firmly 3.875%, Some 3.75% availability
• FHA/VA - still at 3.75% !!
• 15 YEAR FIXED -  3.375%, 3.25% getting closer to viable
• 5 YEAR ARMS -  low to mid 3% range, variations from lender to lender.

Ongoing Guidance: I'd lean more heavily toward locking when Best-Ex is under 4.0 these days.  While I'm optimistic that there are a few more gains in store for MBS with the beginning of new Fed Buying, I'd hate to see 3.875 unexpectedly evaporate on some surprise headline out of Europe or turning point in economic data.

New Guidance: At these levels, only those among you who don't NEED to refinance or are otherwise willing to accept locking at an eighth higher rate or at the same rate but with significantly higher costs should consider floating.  The reason is in the Mortgage-Backed-Securities ("MBS") that govern lender's rates.  Think of these like "buckets."  Up until recently, there were two different buckets that conforming loans could end up in and this allowed for a wider range of volatility in rates.  

 But with the Fed's recently announced commitment to reinvest it's MBS profits BACK INTO MBS, the secondary mortgage market is now almost exclusively focused on ONE bucket.  The thing about these buckets that is helpful to the person deciding whether or not to lock or float is that they only hold certain mortgage rates.  In the current case, we have 3.5% MBS coupons dominating the secondary. 

As long as that remains the case, conforming loans will mostly be falling into 1 of 4 different rates.  These rates are expressed in the graphic below as well as a convenient "meter" of sorts, which should generally coincide with the lock/float leanings you'll find on this blog depending on which of the 4 rates is the current Best-Execution rate.  Hopefully it makes sense.  Let me know your thoughts/questions and I'll elaborate as much as necessary.