Mortgage Rates improved again today. This would be a good day to NOT be looking at US Treasuries for an indication of mortgage rates. 10yr yields moved about 0.02% higher while the Best-Execution mortgage rate at many lenders moved down to 3.875%.

The increased availability of 3.875% Best-Ex rates today would have us feeling even more like locking than simply entertaining 4.0% Best-Execution offerings of the past few weeks. Nothing changes about the rate guidance at current levels.

Today’s BEST-EXECUTION Rates

•30YR FIXED – 4.0%, increasing amount of 3.875′s.

•FHA/VA – 3.75%, fewer 3.875′s

•15 YEAR FIXED – 3.375%-3.5%
•5 YEAR ARMS – low 3% range, huge variations from lender to lender.
Guidance:

In a fundamental sense, we’re well aware of the fact that European drama continues to help domestic bond markets. Technically, we’re impressed that mortgage rates have been this flat for this long. The “batting cage” metaphor or the chart below it if you prefer, continue to be the best guidance we can offer in this uncertain environment. With the ongoing sideways movement of Best-Execution around 4%, the chances increase that the next move will carry a bit of momentum with it (as if the current calm is akin to “storing energy”). If it goes in a mortgage rate-friendly direction, there’s limited benefit (an eighth to a quarter of a point of improvement) versus the damage that could result from it going the other way. Fortunately, neither of those eventualities appear to be happening at the moment, so it’s hard to go wrong. We’ll let you know the day that changes.

Batting Cage Metaphor:

(this can be applied to any endeavor where you’re trying to “go out on a high note”). Rate offerings from lenders over the past month have been like a temperamental pitching machine in a batting cage-generally getting the ball across the plate, but with no really juicy pitches. But recently, we’ve seen some more consistently good pitches (best-ex around 4.0% instead of 4.25%). Sure… you’ve seen better, but not by much (3.875% and RARELY 3.75%). How many more will you count on before calling it a day? Personally, I’d like to end my batting cage session with a nice hit. The more “pitches” you wait for with rates already at a 4.0%, the greater the risk that the next pitch will be a curve-ball. To drop the metaphor, although rates this low CAN go slightly lower, the improvements are fairly minimal compared to how much higher they could go. Still, if you’re not in any particular need to refinance and are operating on a longer-term perspective, we continue to feel good about that “wall” at a 4.25% best-execution level as a good stop-loss point for inclined floaters.

The Home Affordable Refinance Program (HARP) has been extended until December 31, 2013 and allows homeowners to refinance into low mortgage interest rates even if the property has decreased in value.

Established in 2009, for Fannie Mae and Freddie Mac, the Home Affordable Refinance Program provides an option for homeowners to refinance “Under Water Mortgages”. A HARP Refinance addresses situations where the homeowner’s property value has fallen causing them to no longer to qualify under traditional underwriting criteria. Homeowners with a loan owned by Freddie Mac or Fannie Mae have the opportunity to refinance with any participating lender as long as the resulting loan is less than 125% of the current property’s value.

The following criteria must be met to qualify for the Home Affordable Refinance Program:

• You must live in the home being refinanced.
• A HARP refinance only applies to Fannie Mae or Freddie Mac mortgages.
• The homeowner must be able to afford the new lower payment.
• The current mortgage must be up to date with no late payments in the past twelve months.
• Payments on the new loan must be more affordable or more stable than on the existing loan.
• The new mortgage balance may not exceed 125% of your home’s current value.
• The maximum Loan to Value (LTV) cap has been removed on home owners looking to refinance in to a fixed rate mortgage.
• However for homeowners looking to refinance in to an adjustable rate mortgage the maximum LTV is set at 105%.

The popularity of the HARP mortgage program has steadily grown since 2009. The three months ending in February 2011 saw record volume of 145,000 new HARP loans.

Here’s another factor working against the housing market recovery : appraisals. Real-estate professionals say that the results of home appraisals are increasingly stalling or preventing sales.

Fewer than 10 percent of realtors blamed appraisals for killing or delaying a deal prior to 2009, according to the National Association of Realtors. But in 2010, 29 percent of them said it was the cause and through September of this year, a third of them said so.

The culprit seems to be a combination of more thorough appraisals required by lenders to determine a home’s value and a housing market that makes it difficult to find homes that are comparable. When the market was more stable, appraisers could compare values with as few as three homes in the area, but now lenders are requiring many more comparisons, which appraisers say makes it harder to find similar properties to compare.

The appraisal is important for buyers because mortgages are typically offered for an amount up to 80 percent of the appraised value of the home. A lower appraisal means a smaller mortgage. For sellers, the appraisal could delay the sale and send them back to the negotiating table if their price is above the appraised value. Often, the buyers and sellers will meet in the middle when it comes to the difference between the selling price and the appraised value in order to get the deal done.

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