Mortgage rates were forced to give back some of the tremendous improvements seen yesterday as financial markets corrected after the wild swing.  Apart from the past two days, today’s rates are the best in 16 months, and in many cases remain very close to Tuesday’s offerings.  The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains 3.875%.  Whereas 3.75% was merely drifting out of the realm of possibility yesterday afternoon, it’s completely gone today.  4.0% is a far more deserving runner-up.

One thing to be aware of in this environment is the MUCH-wider-than-normal stratification between lenders in terms of pricing.  The volatility wreaks havoc on rate sheet timing and strategies.  Some lenders may be more aggressive in the morning only to raise rates several times during the day.  Others might start out more conservatively and undergo fewer reprices.   More importantly, lenders are simply farther away from each other.  During calmer times, almost all the lenders in the top 20% will have very similar rates and costs.  They’re all over the board right now though.

Even when markets calm down, rate sheets will continue feeling the effects of recent volatility.  Excessive lock volume in recent days, fallout, and renegotiation’s have a major effect on a lender’s balance sheet and pipeline planning.  These are two of the most important considerations when it comes to rate sheet pricing strategy as rate sheets have a direct effect on how many new locks are coming in the door (pipeline planning) and how profitable they need to be (balance sheet).  Needless to say, some lenders navigate this disruption better than others.  The rest may bounce around much more than normal for days to come, regardless of market movements.