Mortgage rates held steady for a second straight day, but only when considering the end-of-day rate sheets.  The morning hours were similar on each of the past two days, with underlying bond markets weakening in concert with rising oil prices.  The afternoon hours were quite different.  Today saw bonds bounce back with a relatively strong move inspired by falling oil prices and a well-received 10yr Treasury Note Auction.  Stronger bond markets imply downward pressure on mortgage rates.  

Indeed several lenders recalled rate sheets early this afternoon for a mid-day improvement.  This was enough to bring the average conventional 30yr fixed rate quote back in line with yesterday's latest levels.  Even then, the only differences between the two days had been to the closing costs associated with the prevailing rate of 4.0%. 

Despite the minimal movement overall, ending with rates officially 'unchanged' underscores the tentative market conditions heading into next week's Fed rate decision.  To reiterate a frequent point: most market participants are operating under the assumption that the Fed will hike short term policy rates, but uncertainty remains as to how markets will trade after the fact.

Loan Originator Perspective

"If you missed the opportunity to lock yesterday, I would continue to float overnight.   Tomorrow we have our final treasury auction for this cycle.  Quite often, after all the new supply has been absorbed by the markets, rates rally.  Today's 10 year auction went rather well, so hopefully tomorrow's 30 year bond auction does the same." -Victor Burek, Churchill Mortgage

Today's Best-Execution Rates

• 30YR FIXED - 4.0%
  
• FHA/VA - 3.75%
  
• 15 YEAR FIXED - 3.25%
  
• 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

• 2015 has been largely about rates rising unevenly from a long-term low brought about by the onset of quantitative easing in Europe.  In May and June, the Fed increasingly began telegraphing a 2015 rate hike.  At that point, the "rising rate environment" seemed like a sure thing, but the Fed's plans hit several snags.  Economic data began deteriorating at home and abroad, causing markets to rethink the higher rate rhetoric.  Mortgage rates hit 6 month lows at the end of October, just as the Fed surprisingly changed it's policy statement to specifically suggest December as a rate hike possibility (something they haven't done since 1999).
  

• In the bigger picture, rates had been at a crossroads, trying to determine if they would move back to 2015 highs or if the late summer swoon was merely the first wave of a longer campaign.
  
  
• While there is still plenty of room to be concerned about increasingly weak global economic growth, that's not a solid enough reason to float in this environment.  With the Fed almost certainly on track for a December rate hike, there is much  more risk that rates move quickly higher vs quickly lower.  The big picture global malaise can serve as the basis for long term hope, but in the short term, assume upward pressure on rates when formulating your strategy.
  
  
• 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, conventional 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).