Mortgage rates dropped abruptly today as political developments in Italy caused investor panic over the weekend.  This is a bit of a complex topic, but the bottom line is that Italy will soon be voting on what will essentially be its membership in the European Union.  Keep in mind that's a drastic oversimplification, but that's what financial markets are trading.

An Italian exit of the EU could be a huge deal for several reasons.  At the very best, the prospect creates uncertainty in financial markets.  Traders cope with that by buying bonds (among other things) from countries that aren't going anywhere.  The bigger the bond market for that country, the more readily it's treated as a safe haven.

As such, much of the panic money has found its way into the US bond market.  Excess demand for bonds pushes rates lower.  In today's case, the push is one of the hardest we've seen all year, and it brings rates back to levels not seen since mid-April.  

Loan Originator Perspective

Italian political discord  (and a potential EU exit) sparked an impressive bond rally today.  I'm floating new loans, it'll take a while for these gains to hit rate sheets. - Ted Rood, Senior Originator

Thank you Italy. Some great gains as instability in markets drives rates down.  Taking advantage of improvements and locking at Application. -Al Hensling

Today's Most Prevalent Rates

• 30YR FIXED - 4.5-4.625%
• FHA/VA - 4.375%
• 15 YEAR FIXED - 4.00%
  
• 5 YEAR ARMS -  3.75-4.25% depending on the lender

Ongoing Lock/Float Considerations 

• Rates have been moving higher in a serious way due to headwinds that cannot be quickly defeated.  These include the Fed's increasingly restrictive monetary policy outlook, the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.
  
  
• While we may see periodic corrections to the broader trend toward higher rates, it's safer to assume that broader trend can and will continue.  Until that changes, it makes much more sense to remain heavily-biased toward locking as opposed to floating.

• Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders.  The rates generally assume little-to-no origination or discount except as noted when applicable.  Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.