Mortgage rates continued a recent pattern of small day-to-day changes today.  This time, however, lenders were more unified in a move to slightly lower rates.  The recent norm has been for different lenders to move in different directions but for the average to stay fairly close to unchanged.  3.625% remains intact as the most prevalently-quoted conforming 30yr fixed rate for top tier scenarios.  A few lenders are already back down to 3.5% though the costs are still a little higher than they were two weeks ago.

This morning's economic data provided an initial boost for rates markets as the important Durable Goods report was much weaker than expected.  Weak economic data tends to benefit bond markets and hurt stocks.  That said, stocks were already arguably under pressure related to earnings season.  When they bounced back in the afternoon, bond markets followed, resulting in several lenders raising rates later in the day.

Tomorrow brings the Fed's policy announcement.  To be sure, the global market focus is currently on Europe much more than the Fed, but the Fed can always have a big impact on trading levels.  This, combined with the recently narrow range in rates, sets the stage for more volatility tomorrow than we've seen over the past few days.

Loan Originator Perspective

"Rate sheets did improve over night, but nothing major. Europe continues to hold rates at the best levels in about 2 years, and i believe that will continue. In addition, data from the US seems to be taking a serious turn in the wrong direction for those thinking our economy can withstand the slowdown overseas. Like yesterday, i favor floating all loans overnight." -Victor Burek, Open Mortgage

"Rates improved considerably this morning, but edged upward in the PM. The far worse than expected durable goods data released this morning, combined with EU drama may have been the motivation. Tomorrow brings the Fed statement, which always gets the markets' attention. I haven't locked my floating loans yet, but will be watching MBS Live intently tomorrow!" -Ted Rood, Senior Loan Originator

"With only 2 more Fed Meetings left before the supposed first salvo of a policy rate increase markets will be looking for signs of a change in sentiment. Will the Fed maintain it's course (likely) or will it nuance its language in a way that gets folks wondering if any rate increase will potentially be delayed. WIth the Greek crisis threatening to rear it's ugly head again and disinflationary forces at work in many corners of the world, a delay is certainly possible. To me, the uncertainty this creates necessitates caution in the short term (locking) and cautious patience in the longer term." -Hugh W. Page,Mortgage Banker, Seacoast Bank

"Mortgage bonds opened higher today and at one point looked like they may set new 2015 highs. They however were not able to close at the highs of the day. Tomorrow brings the Fed Decision and I'm particularly interested in hearing what they will say about inflation. If the feds appear worried about deflation we can see rates come down from current levels. I would float into tomorrow and pay close attention the Fed decision before choosing to float or lock." -Manny Gomes, Branch Manager Norcom Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 3.625
  
• FHA/VA - 3.25
  
• 15 YEAR FIXED -  3.0-3.125
  
• 5 YEAR ARMS -  3.0 - 3.50% depending on the lender

Ongoing Lock/Float Considerations

• 2015 began with a strong move to the lowest rates seen since May 2013.  The catalyst has been and continues to be Europe.
  
  
• European bond yields trended constantly lower in 2014, thus playing a prominent role in keeping US rates lower than they otherwise might be.  Many feel that Europe will continue to slide until their central bank engages in US-style quantitative easing.  Some see this happening in early 2015.  In any event, we're looking for a turn in Europe, first and foremost, before worrying about the longer-term trend in bond markets being at serious risk of reversing.
  

• It's impossible to know when Europe will turn a corner, and even then it's only the sort of thing we'll be able to observe in hindsight.  That means every head-fake toward higher rates runs the risk of developing into a longer term rise, even if those risks vary greatly in terms of probability.  Clients with longer term time horizons and who otherwise don't mind losing some ground in exchange for the chance at locking even lower rates are the only ones who should float.  Clients who must close by a certain date or who can't afford to lose any ground on rates should generally be locking even though the longer term trend has been in their favor for over a year now.
  
  
• 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).