Mortgage rates are skittish and move like gas prices – slow on the way down, and fast on the way up. From this afternoon’s MND:


Mortgage rates remain under significant pressure, having now moved higher almost every day in February.  So far, this is the worst month for rates since Nov 2013.  While that sounds pretty bad, in this case, the weakness has more to do with a reaction to previous strength.  The trend toward lower rates in 2014 had been very slow and steady.  January saw an acceleration of that trend and now February is simply bringing us back in line.  Even the strongest long-term trends undergo these sorts of corrections.

On such occasions, the question will always be: is this just a correction in a longer term trend or are rates done heading lower?  Based on where we are today, it would be far too soon to say that the long-term trend toward lower rates is defeated.  Fortunately, the strategy is the same either way.

At times like these, the lock/float outlook is more defensive.  For those of you who are intensely interested in catching the falling knife (i.e. deciding not to lock despite recent moves higher in rates), there’s still some room for that provided the risks are understood and that a ‘stop-loss’ level is understood.  One of those risks is that things could still get worse before they get better (i.e. there’s more room for rates to move higher without violating the longer-term trend).

3.75% is still the most prevalent conforming 30yr fixed quote for top tier scenarios, but 3.875% is now not far behind.  A week and a half ago, it was 3.5% and 3.625%.

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