Mortgage rates fell today, largely in response to the past two days of bond market improvement. In other words, lenders had been keeping their guard up ahead of today's key inflation data (The Consumer Price Index, or "CPI"). While it's true that a strong CPI report had the potential to push rates back to the highest levels since this summer, today's data wasn't strong enough. In fact, most of the metrics were roughly in line with forecasts.

Still, the strength and resilience in bond markets shouldn't be discounted. Bonds also digested strong Retail Sales data and managed to maintain stronger levels achieved overnight. In general, "strength" in bond markets translates to lower mortgage rates, although there can be some lag between the two.

Most lenders continue quoting conventional 30yr fixed rates in the 4.0% range, but today's improvement brings some of the aggressive lenders back down to 3.875% on top tier scenarios. Most borrowers will simply see today's improvement in the form of lower closing costs (or a bigger lender credit) on the same rates quoted yesterday.

With the inflation data out of the way, there is less immediate risk in the coming days. That said, rates have yet to commit to a strong move below their best recent levels. That means locking and floating should still be approached cautiously, but perhaps with slightly more room for optimism compared to the beginning of the week. Whatever the case may be, the potential for a bigger move in the near future remains, but the odds have evened out a bit as to the direction of that move.

Today's Most Prevalent Rates

30YR FIXED - 4.0%

FHA/VA - 3.75%

15 YEAR FIXED - 3.375%

5 YEAR ARMS - 2.75 - 3.25% depending on the lender