Mortgage rates moved gently higher today in most cases, though some lenders were unchanged and in rare cases, slightly improved.  There was little by way of relevant data or events to motivate market movement as the August "vacation weeks" gets underway.  The little movement that was seen was not enough to make any sort of dent in the 3.5% Best-Execution rate that recently returned for 30yr Fixed Conventional loans.

(Read More:What is A Best-Execution Mortgage Rate?)

It's tempting to get comfortable with the recent level of stability seen after the rising rates through much of August.  After losing 3.5% as a Best-Ex rate, it was quickly regained and things have been almost eerily calm ever since.  We don't expect that to continue to be the case.  If things are going to get volatile, it's only a matter of time before they do.

The key factors driving the potential volatility are concentrated in the first half of September, but things could start moving as early as the end of this week.  Wednesday and Thursday offer some moderately important economic data for the domestic economy as well as Treasury Note auctions.  Then Friday contains the big-ticket event for this week when Bernanke speaks at Jackson Hole--largely seen as a prelude to a very important Fed policy announcement in early September. 

Mortgage rates will have a hard time going much lower than current levels until after some of these big-ticket events, and this assumes the events resolve in such a way as to suggest lower rates.  This isn't to say that gains are impossible or improbable even, simply that their magnitude is limited by the anticipation for bigger questions that need to be answered.

Long Term Guidance: We'd continue to advocate against trying to "get ahead" of current market movements due to the high degree of uncertainty.  The long-term direction of rates has been down, down, down, for the past year.  At some point, this will turn, and when it does, we highly recommend that you're prepared by drawing your OWN line in the sand as to how much rates would have to rise before you lock at a lost.  That's assuming you don't simply lock as soon as you're able.  For those with lower levels of risk tolerance who would consider movements in cost (despite unchanged interest rates) to be significant, or for those within 15 days of closing, or who are purchasing, this certainly favors locking.  We'd also consider that rates remain very close to all-time lows and uncertainty to all-time highs.  This also favors locking.

Loan Originator Perspectives

Julian Hebron, Branch Manager, Loan Agent, RPM Mortgage

Reclaiming the 50 day moving average on the benchmark 3.5 Fannie Mae MBS coupon has led to lower rates to start the week, continuing a drop from last week. This is the dip I've been advising clients to take once it returned following a rate rise that ran from July 24 through August 17. My lock advisory today goes for all refi and purchase clients.

Mike Owens, Partner with HorizonFinancial, Inc.

Are rates going lower? yes or no hard to say for certain other than they will eventually rise. They have improved recently after a small spike. I think it's best to lock your rate since that eliminates any risk of an increase. Does this rate benefit you and can you live with it if this is the lowest you can get? I can float down if we see improvement, but by locking, you have set the ceiling. Would you rather have locked and rates dropped or floated and rates went up? Lock so you don't have to answer that question.

Today's BEST-EXECUTION Rates 

• 30YR FIXED -  3.5%
  
• FHA/VA - 3.5% (varies more between lenders than conventional 30yr Fixed)
• 15 YEAR FIXED -  2.875-3.00%
• 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations 

• Rates and costs continue to operate near all time best levels
• Rates could easily move higher or lower, but given the nearness to all time lows, there's generally more risk than reward regarding floating
• But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.
• (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).