Mortgage rates were forced to give back some of the tremendous improvements seen yesterday as financial markets corrected after the wild swing.  Apart from the past two days, today's rates are the best in 16 months, and in many cases remain very close to Tuesday's offerings.  The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains 3.875%.  Whereas 3.75% was merely drifting out of the realm of possibility yesterday afternoon, it's completely gone today.  4.0% is a far more deserving runner-up.

One thing to be aware of in this environment is the MUCH-wider-than-normal stratification between lenders in terms of pricing.  The volatility wreaks havoc on rate sheet timing and strategies.  Some lenders may be more aggressive in the morning only to raise rates several times during the day.  Others might start out more conservatively and undergo fewer reprices.   More importantly, lenders are simply farther away from each other.  During calmer times, almost all the lenders in the top 20% will have very similar rates and costs.  They're all over the board right now though. 

Even when markets calm down, rate sheets will continue feeling the effects of recent volatility.  Excessive lock volume in recent days, fallout, and renegotiations have a major effect on a lender's balance sheet and pipeline planning.  These are two of the most important considerations when it comes to rate sheet pricing strategy as rate sheets have a direct effect on how many new locks are coming in the door (pipeline planning) and how profitable they need to be (balance sheet).  Needless to say, some lenders navigate this disruption better than others.  The rest may bounce around much more than normal for days to come, regardless of market movements.

Loan Originator Perspective

"Despite the major volatility, we are in a longer-term downtrend on rates and it will take some time to decipher where the floor is. I'm only locking loans that are cleared to close or for clients who are content with their current rate and cannot digest speculating. I see better rates coming. But then again, I've been wrong plenty." -Constantine Floropoulos, Quontic Bank

"While tempting to float, I really think that taking the best pricing in the last 18 months is a very smart decision. If you lock, and there is a significant move lower, you'll still have the opportunity to float down or renegotiate with your lender. Locking doesn't guarantee you're locking in at the best pricing over the next week, but I really think it is the smartest decision at these levels." -Brent Borcherding, brentborcherding.com

"No surprise that we lost a chunk of the gains from yesterday given the swiftness of the movements ending with a late day worsening into the close. Locking yesterday to protect the fabulous gains we received was certainly the call for borrowers closing within 30 days as it may very well be the best pricing we'll see for awhile. That being said, with uneasiness in the stock markets, and the world economy it probably wouldn't take a lot to take us back down in rates again. The environment is more risky now though in my opinion so use youir tolerance for it as your guide." -Hugh W. Page, Mortgage Banker, Seacoast National Bank

"This market has sure been volatile with large price swings happening within minutes. This may be the way things will remain for sometime. In markets like this caution is always recommended but if you can stomach the volatility in the short term we could potentially see lower rates still to come. " -Manny Gomes, Branch Manager Norcom Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 3.875
  
• FHA/VA - 3.375-3.5
  
• 15 YEAR FIXED -  3.125-3.25
  
• 5 YEAR ARMS -  3.0 - 3.50% depending on the lender

Ongoing Lock/Float Considerations

• The hallmark of 2014 has been a narrow range in rates.  Too many market participants bet on rates going higher in 2014, and markets punished that imbalance with a paradoxical move lower.
  
  
• European markets helped that process along and continue to play a prominent role in keeping US rates lower than they otherwise might be.  

• For most of the Summer and early Fall months, rates held a narrow range of 4.125% -4.25% (essentially where the 2014 rate recovery has bottomed out) and finally broke to a 3.875%-4.0% range in mid-October.  It's too soon to tell if this is a brief window of opportunity or the continuation of 2014's very gradual improvements.
  
  
• As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).