Let's just throw out the adjustable rates for now, clients are scared, and no one wants them fixed rates are usually a better or very close the same rate anyway, except for maybe the 3/1 ARM because of the inverted or flat yield curve(what ever those are) so I won't speak of them.
How are mortgage rates determined? From Mortgage Backed Securities or Mortgage Bonds NOT the 10 year treasury note like many believe.
Rates are way off their lows of month ago right around 6.25% -6.375% for a 60 day lock today 2.26.08 as of 1:10pm EST on 30 year conforming (that is below $417,000 in most areas). They did touch as low as 5% before on January 23rd for a very short time period.
So why have they turned so rapidly? Inflationary fears, with rising inflation, the value of a dollar in the future is considered less valuable causing demand for a higher yield on mortgage bonds, which drives trading prices lower on these bond thus causing rates to rise.
Bonds keep testing the 200 day moving average and have yet to close below that level. If they do watch out...rates to rise another .25% or so.
So keep an eye out for inflation concerns as well as an increase in unemployment, those equal bad news for mortgage bonds and cause rates to increase.
Please feel free to ask more information about rates, whether a Loan Officer or not, I can keep you up to date and help you provide more value to your clients.