Mortgage Rates were sideways to slightly higher today, although some lenders offered modest improvements after the release of the Minutes from the most recent Fed meeting.  Some investors were prepared for (or "worried about") the possibility that the Minutes would convey more resolve on the part of the Fed to hike rates in one of the upcoming meetings.  Instead, the Minutes merely gave us more of the same "it depends" type of verbiage and noted that most of the Fed voters prefer to wait for more economic strength and signs of inflation before hiking.

Because bond markets (which dictate rate movement) can defend against certain outcomes by trading in the direction of that outcome.  In other words, if bond investors are worried the Fed might say something that makes rates move higher, they can begin to trade rates part of the way there, so as to minimize volatility if the outcome is realized.  In today's case, that meant that rates were slightly higher than they needed to be in the underlying bond market, and they've since come down to slightly lower territory than yesterday.

The catch is that bond market rates don't instantly translate to mortgage markets.  That's why many lenders are still offering slightly higher rates versus yesterday, even though bond markets suggest otherwise.  Fortunately, we're not talking about huge movements here.  In fact, contract interest rate quotes (the "NOTE rate") are completely unchanged with most lenders at 3.375-3.5% on top tier conventional 30yr fixed scenarios.  The day over day changes would only be seen in the form of slightly higher closing costs (or lower lender credit, depending on the structure of the quote).

Loan Originator Perspectives

With the Fed July Minutes out of the way now I would be inclined to float my interest rate if my closing were beyond 30 days.  However, I would make sure you're ready to lock quickly if events move unfavorably.  For locks of 30 days or less I would still be inclined to lock what are still some of the lowest interest rates for mortgages we've seen in our lifetimes.  In the current environment, it will be much easier for rates to move higher than it will for them to go lower.  Evaluate your own risk tolerance of course. -Hugh W. Page, Mortgage Banker, SeacoastBank

It seems bond traders liked the Fed minutes today as bonds have begun to rally after the last few days of selling.  With bonds moving into the green and taking into account that lenders were most likely conservative on their initial rate sheets, I favor floating overnight. -Victor Burek, Churchill Mortgage

Well, after yesterday’s hawkish Fed speakers we got some of those losses back after the actual Fed minutes from the July meeting were released at 2pm today. So no reprices yet but we should have a little bit “in the bank”. Some data early tomorrow AM before a quiet Friday. Overnight it might be worth floating to see if we get some back. Still very much in the range we’ve been in so keep an eye out for any motivations to get out, either way. -Jeff Anderson, Loan Officer, Salem Five Mortgage, LLC

Mortgage rates have given up a little juice over the last week or so. I favor floating into the next few days to regain some of the losses and lock immediately. Any further weakness would trigger locking in for my pipeline. As always, time is the key, loans with over 30 days to close may speculate further. -Constantine Floropoulos, VP, The Federal Savings Bank

Today's Best-Execution Rates

• 30YR FIXED - 3.375 - 3.5%
• FHA/VA - 3.0 - 3.25%
• 15 YEAR FIXED - 2.75%
  
• 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

• In the biggest of pictures, "global growth concerns" remain the driving force behind the long-term trend toward lower rates

• Amid that trend, periodic corrections toward higher rates can and will happen.  These can happen for no apparent reason, or they can be brought on by changes in expectations surrounding central bank policy at home and abroad, as well as geopolitical and systemic risks
  
  
• Time horizon and risk tolerance are 2 variables to consider when it comes to locking.  If you have plenty of time and don't mind losing some ground, set a limit as to how much higher rates could go before you'd lock to avoid further losses, and then float in the hopes of never seeing that limit.
   
• In the shorter-term, it's always good to look for lock opportunities after rates have been moving lower or sideways repeatedly, especially if they've since begun to move back up in any sort of consistent way. 
   
• 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).