Mortgage rates fell today, but continue to lagging behind the movements seen in underlying bond markets.  Part of that has to do with the timing of bond market swings over the past few days, but lenders also simply want to see markets pick a theme and stick with it.  Simply put: trading levels in bonds ultimately dictate rates, and today's trading levels suggest the lowest rates of the month.  Given that today's rates are still generally in line with last Friday's, it would be fair to conclude that we'll see more improvement on lender rate sheets, even if bond markets merely hold flat tomorrow.

Although we can't ever know what bond markets will do tomorrow, the fact that mortgage rates are heading into the day with a small advantage is useful  knowledge.  It means there's comparatively less risk involved in floating one's rate.

Balance that against the fact that lenders will likely continue to be cautious about making big adjustments until they see what markets are doing with Thursday's policy announcement from the European Central Bank.  Today's bond market gains suggest that traders are already betting on a rate-friendly reaction, but there's no telling if that sentiment has already run its course.