Mortgage rates had a bad Valentines Day.  It's not that anything happened on that Saturday.  Indeed, lenders weren't even open.  It's just that things changed significantly by the time US markets reopened on Tuesday, with rates moving higher at the fastest pace in over a year.  After a purely corrective bounce the following day, rates spent the next three days in limbo.  That brought us to yesterday's big move lower following Yellen's testimony and an anticlimactic Eurozone response to the Greek bailout (initial approval), but it was an outlier against an otherwise crummy trend toward higher rates in February.

Until today...

Today brought only modest improvement, but taken together with yesterday, it was the strongest 2-day stretch of the month.  More importantly, holding ground today helps to solidify yesterday's bigger move as something other than an anomaly.  It begins building a case for February's negative trend to be meaningfully threatened.  As is always the case, there's no way to be sure that this push back continues, but the point is that it leaves the door open for a push back to continue at all! 

As for the nuts and bolts of the day, nothing much happened.  Economic data was generally ignored and Yellen's 2nd round of congressional testimony offered no surprises.  Rates inched lower for most lenders due to stronger market levels at the open (there weren't many reprices during the day).  At current levels, 3.75% is a more prevalent quote for top tier conventional 30yr fixed scenarios than 3.875%.

Loan Originator Perspective

"The benchmark 10 year note has managed to hold onto all the recent gains and actually build on them today. We have our final treasury auction of the week tomorrow. With new supply about out of the way tomorrow, i favor floating everything overnight. It is quite common for treasuries to rally once all new supply has been absorbed by the markets. Additionally, month end tends to also be supportive of strong treasury demand." -Victor Burek, Open Mortgage

"Mortgage Rates improved for consumers today, not because the market continued to improve, but because lenders finally passed along some of the gains from yesterday. The fact that the 10 year Treasury and Mortgage Backed Securities are holding the same levels as yesterday and the 10 year remains below 2.00% yield....really leads some credence to lower rates ahead. Floating remains a great opportunity." -Brent Borcherding, brentborcherding.com

"My comment yesterday was "let's see if we can stay at these levels tomorrow", and we did just that. It's encouraging to be back in our lower trading range. My rates are down about 1/8th% from last Friday at this point. I'm fairly neutral on locking now, which is a change from last week. I'm not expecting any huge rate drops, as EU fiscal drama is on hold for the moment. but could certainly see some small further gains the next few days." -Ted Rood, Senior Originator

"Having made our way through the two day Fed testimony without stepping on any landmines I'm optimistic about where rates can go from here. This is the third day in a row we've seen lower yields in influential long term treasuries. In addition and perhaps more importantly technical resistance levels have been broken which can be another positive sign for rates. There is a slew of data due out tomorrow morning at 8:30 which is typically before rate sheets are published so anyone floating overnight should be aware that their rate tomorrow will reflect the impact of this news; for good or worse." -Jason B. Anker, Vice President- Loan Officer at Salem Five

Today's Best-Execution Rates

• 30YR FIXED - 3.75
  
• FHA/VA - 3.25-3.5
  
• 15 YEAR FIXED -  3.00-3.125
  
• 5 YEAR ARMS -  2.75 - 3.25% 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).