The holiday shortened week ahead will culminate with a high-risk event: the release of the monthly Employment Situation Report on Friday morning. This economic event will likely offer solid guidance on the state of not only the broader economy but  "The Wall"  that continues to block mortgage rates from making further positive progress. 

On Friday we discussed changes in the context of "The Wall", noting that it might be on the verge of toppling over after an abrupt drop in borrowing costs last week.   To see visual representation of that, take a look at this Consumer Rate Quote Chart.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate has fallen solidly to 4.625%. A few lenders are even quoting C30 loans at 4.500% with no extra closing costs.  If you are looking to move down from there, you'll be assessing the trade-offs between higher closing costs and lower monthly payments.  This could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.  On FHA/VA 30 year fixed "Best Execution" is also a moving target roughly centered on 4.375% with several lenders offering 4.25%. 15 year fixed conventional loans are still best priced at 3.875%. Five year ARMs are best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:  A big step was taken in the right direction for mortgage rates last week. And while "The Wall" is still standing, there is now clear justification for borrowers looking to float their loan on an intermediate to long-term timeline. Further positive progress will however be slow and short-term back-ups are to be expected. From that point of view, borrowers working on a shorter lock/float timeline should remain defensive of new, lower "Best Execution" Mortgage Rate quotes. Your main goal is to keep that lower note rate offer.  Stay tuned for further developments. This is getting exciting!

CURRENT GUIDANCE: The tone has been generally positive for mortgage rates since April 11^th.  We continue to entertain that it could generally stay that way for even longer, clearly justifying longer term floating strategies.  However, further positive progress can be slow and short term corrections are to be expected.  That means borrowers who are working on a shorter lock/float timeline should remain defensive of new, lower "Best Execution" Mortgage Rate quotes. Your main goal is to keep that lower note rate offer, especially with the high risk event on the horizon in the form of this Friday's Employment Situation Report.  This is the sort of report than can either confirm the recent break lower in borrowing costs, or send them right back to other side of the fence.

 What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

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"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.