Mortgage rates moved lower today preserving the pocket of recovery that formed on the heels of last week's Employment Situation report.  Every day so far this week has offered the lowest rates in the past 30 days, and this wouldn't have been the case if we'd gone any higher today.

Such a move would have risked reintroducing 4.625% as the most prevalently quoted conforming 30yr fixed rate for ideal scenarios (best-execution).  As it stands, today's strength keeps 4.5% in force.  When adjusted for day to day changes in closing costs, rates fell an equivalent of 0.03% today.

Compared to the rest of this week, Thursday is tied for the 2nd best rate sheets.  It also follows 2 days of progressively higher rates and therefor stands out as a good opportunity to lock for those with little-to-no risk tolerance.

If you're more willing to take risk, today also makes for a nice set-up with respect to the strategy we discussed earlier this week using a line in the sand at slightly higher rates to act as a trigger to lock.  In other words, if you didn't lock yesterday, you can now use yesterday's levels (the highest rates this week) as a trigger to cut your losses and lock.  As always, floating in what has been a pervasive rising rate environment is inherently risky.

Loan Originator Perspectives

"Yesterday, the benchmark 10 year bounced off of support around the 2.90 level. This morning it has approached the bottom of the recent range around 2.84. For yields to fall further, we are going to need some pretty bad data or a big miss on next months non farm payroll report. That said, the saying goes, lock the price highs, float the lows(higher price = lower yields). With yields near recent lows(price highs), I favor locking loans within 30 days of closing today but wait til end of day as some lenders have already repriced better today and more may follow." -Victor Burek, Open Mortgage

"We caught an up day today, nice to break the two day losing streak. The gains came early in the day, which helped many AM rate sheets. It's still a day to day struggle to retain improvements. As previously noted, until we see economic or geopolitical strife, hard to envision any major gains." -Ted Rood, Senior Mortgage Planner, Wintrust Mortgage

"The roller coaster continues. Not a lot of rate movement but nice to see some stability. Still favor locking at application if possible. Chances of rates going up greatly exceed the chances of a drop." -Michael Owens, VP of Mortgage Lending at Guaranteed Rate, Inc. NMLS # 107434

" I still think locking is the prudent move. Tuesday and Wednesday weren't kind to rate sheets and today looks to have wiped out half of those losses. If you are closing within 30 days, my opinion is to lock." -Steve Chizmadia, Mortgage Advisor, American Capital Home Loans

Today's Best-Execution Rates

• 30YR FIXED - 4.5%
  
• FHA/VA - 4.25%
  
• 15 YEAR FIXED -  3.5%
  
• 5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

• The prospect of the Fed reducing its asset purchases weighed heavy on interest rates for the 2nd half of 2013, causing volatility and generally pervasive upward movement.
  
• Tapering ultimately happened on December 18th, 2013.  Markets had done so much to come to terms with it ahead of time that it essentially just confirmed the the 6 month move higher in rates, but didn't make for another immediate spike higher.
• That said, we should assume that we're still in a rising rate environment on average with scattered pockets of recovery providing clear opportunities to lock.  
• The exceptionally weak employment data on January 10th provided on of these "pockets of recovery."  There are two ways to approach these.  More risk tolerant: set a line in the sand just slightly higher in cost than your current quote.  In other words, this could be either the next .125% higher in rate or simply a few hundred dollars more in closing costs.  Then commit to lock when your quote crosses above that line in the sand.  Less risk tolerant: lock on the day of or day after any significant move lower in rates.
• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from 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).