Although markets had been focusing on this morning's Employment Situation Report as a high-risk event (and indeed it was), the report was mixed enough that it didn't send either side of the market hurtling recklessly in one direction or the other.  Things were actually fairly equivocal until news out of Washington began making rounds that GOP lawmakers would try to prevent increased US participation in the potential IMF bailout of Europe.  Mortgage Rates ultimately improved today because of events such as those--unrelated to the jobs report.  In other words, the jobs data had a CHANCE to be a big market mover, but ultimately left the door open for other contenders. 

Lenders are smart enough to know about the high-risk nature of that event, so it makes sense that we're seeing a VAST majority of lenders adjust rates lower through the course of the day.  Best-Execution is STILL most prevalent at 4.0%, but there are slightly more 3.875's today and far fewer 4.125's.  No change to the ongoing guidance below.  In fact, if you saw your rate move an eighth lower today, we'd be even more interested in locking that in.

Today's BEST-EXECUTION Rates

• 30YR FIXED -  4.0%, increasing amount of 3.875's.
  
• FHA/VA - 3.75%, fewer 3.875's
  
• 15 YEAR FIXED -  3.375%-3.5%
• 5 YEAR ARMS -  low 3% range, huge variations from lender to lender.

Guidance:

In a fundamental sense, we're well aware of the fact that European drama continues to help domestic bond markets.  Technically, we're impressed that mortgage rates have been this flat for this long.  The "batting cage" metaphor or the chart below it if you prefer, continue to be the best guidance we can offer in this uncertain environment.  With the ongoing sideways movement of Best-Execution around 4%, the chances increase that the next move will carry a bit of momentum with it (as if the current calm is akin to "storing energy").  If it goes in a mortgage rate-friendly direction, there's limited benefit (an eighth to a quarter of a point of improvement) versus the damage that could result from it going the other way.  Fortunately, neither of those eventualities appear to be happening at the moment, so it's hard to go wrong.  We'll let you know the day that changes.

Batting Cage Metaphor:

(this can be applied to any endeavor where you're trying to "go out on a high note").   Rate offerings from lenders over the past month have been like a temperamental pitching machine in a batting cage-generally getting the ball across the plate, but with no really juicy pitches.  But recently, we've seen some more consistently good pitches (best-ex around 4.0% instead of 4.25%).  Sure... you've seen better, but not by much (3.875% and RARELY 3.75%).  How many more will you count on before calling it a day?  Personally, I'd like to end my batting cage session with a nice hit.  The more "pitches" you wait for with rates already at a 4.0%, the greater the risk that the next pitch will be a curve-ball.  To drop the metaphor, although rates this low CAN go slightly lower, the improvements are fairly minimal compared to how much higher they could go.  Still, if you're not in any particular need to refinance and are operating on a longer-term perspective, we continue to feel good about that "wall" at a 4.25% best-execution level as a good stop-loss point for inclined floaters.  Ask us to explain more about that if it doesn't make sense. 

Another way of looking at the lock/float spectrum based on the lowest MBS coupon actively trading and being produced in the secondary mortgage market: