Although the recently confirmed 3.875% Best-Execution level remains intact for 30yr fixed, conventional loans, Mortgages Rates moved slightly higher today in terms of the costs required to obtain those rates.  Weakness in Treasuries today was more pronounced than MBS, the "mortgage-backed-securities most directly responsible for determining mortgage rates.  (learn more about how we calculate Best-Execution in THIS POST). 

Initially driving today's market movements was news that political leaders would meet in Greece to vote on a soon-to-be-drafted bailout package.  Greek officials have been reluctant to stand up in favor of creditor-imposed austerity.  Even though they likely realize the dire implications of such reluctance, the political backlash from Greece's populace is pretty dire in it's own right.  But that realization has been slow to work its way through markets, which seem to be willing to wait in upbeat anticipation for new developments in Greece that never seem to happen--at least not on time.  

It was the same again today.  Markets were initially upbeat on the promise of ongoing negotiations being concluded.  When we say "markets" in this context, it's more to do with equities/stocks, whereas mortgage rates are part of bond markets.  When markets are upbeat in this way, it decreases the demand for less risky investments such as Treasuries and MBS.  When demand decreases for MBS, prices fall, and that means that lenders will earn less by selling pools of loans on the secondary market, and must raise rates to keep pace with their various cash-flow considerations. 

Even after news came out that the meeting in Greece would not take place until tomorrow, stocks only faltered momentarily, deciding that the nature of the news (no material objections to the proposal on the table, simply a delay in getting it drafted) wasn't enough to reverse the current course.  Bond markets, however, were able to put an end to a somewhat ugly slide weaker.  The damage had already been done as far as mortgage rates would be concerned, but the silver lining is that it only amounted to minimal increases in borrowing costs while most scenarios will still be best-executed at the same rates today as yesterday's.

With the NEW potential resolution on Greek negotiations tomorrow as well as an important 10yr Treasury Auction, there are some sizable risks ahead for mortgage rates, which heretofore have done a good job of holding onto 3.875% Best-Execution through some rough waters.  As always, markets and rates can move in either direction, but we would point out that those movements could be bigger-than-average tomorrow.

Today's BEST-EXECUTION Rates

30YR FIXED -  3.875% mostly, less 3.75 today, 4.0's getting closer
FHA/VA -3.75%
15 YEAR FIXED -  3.25%
5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

Rates and costs continue to operate near all time best levelsCurrent levels have experienced increasing resistance in improving much from hereThere are technical reasons for that as well as fundamental reasons
Lenders tend to get busier when rates are in this "high 3's" level and can throttle their inbound volume by raising rates or costs.While we don't necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floatingBut that will always be the case when rates operating near historic lows(As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).You can see a list of all comments on MND by clicking the 'Read the Latest Comments' option under the 'Community' menu.

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As encouraging housing statistics coupled with testimony from bullish real estate experts points toward a possible market turnaround, a handful of towns are leading the charge to recovery.

Somewhat counter-intuitively, many of the markets making the speediest recoveries also turn out to be some hardest-hit by the foreclosure crisis. Florida, which was walloped from the housing bust, contains a majority of these market forerunners.

Drawing on rankings compiled by Realtor.com that determine top recovering markets -- based on measures including year-over-year median price appreciation, year-over-year median inventory age and year-over-year inventory reduction -- AOL Real Estate brings you the top 10 towns on the road to recovery. Click the gallery above to see the full list.

Also see:
Top 5 Real Estate Markets to Watch in 2012
Out-of-Towners Covet Florida Real Estate, Locals Scratch Heads

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.

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By Andrea V. Brambila

While national home prices and sales may not recover to their historical levels until 2013 at the earliest, some local housing markets always outperform others in any given year.

In this second annual report (see last year's "Top 10 Markets to Watch in 2011"), Inman News examined housing, economic and demographic data for metropolitan areas nationwide to identify 10 housing markets to watch in 2012.

These markets are showing signs of strength in several key metrics, including above-average price appreciation, a flourishing job market, a high rate of sales in proportion to population, a high level of home affordability, low foreclosure activity, a below-average share of distressed sales, a low vacancy rate, and other characteristics indicating a healthy housing market.

While real estate markets in the Midwest and Northeast made up the majority of markets on last year's list of 10 markets to watch, this year the Midwest and the South dominated. Two Northeastern markets, both in New York state, also made the list; and no markets in Western states are on the list.

The 10 markets are, in order: Raleigh-Cary, N.C.; Wichita, Kan.; Rochester, N.Y.; Des Moines-West Des Moines, Iowa; Chattanooga, Tenn.-Ga.; Peoria, Ill.; Amarillo, Texas; Binghamton, N.Y.; Waterloo-Cedar Falls, Iowa; and Bloomington-Normal, Ill. The Des Moines and Bloomington-Normal metros are on the list for the second year in a row.

Nationwide, unemployment is high, though trending down; the median price of an existing home fell over 4 percent in 2011; and existing-home sales rose a modest 1.7 percent last year, according to the National Association of Realtors.

A 'Transitional Year'

Stan Humphries, chief economist for Zillow, said 2012 will be a "transitional year" in the housing recovery, with an improvement in home sales and prices anticipated to fall to a long-awaited "bottom."

Zillow identified some markets that are "undervalued" on a historical basis in a chart provided for this report, and Inman News reached out to a range of other real estate research and information companies for their insight on those real estate markets expected to outperform others in the year ahead. Those companies' findings were not considered in the review and selection process of the top 10 markets featured in this report.

"While home values are expected to fall further (another 2 to 4 percent) in 2012 with a definitive bottom probably a year away, encouraging precursors to a true stabilization of home values are falling into place as the new year begins," Humphries said in a forecast Tuesday.

"Home sales will show a more consistent upward trend this year, slowly reducing the amount of vacant housing inventory. This increased demand will eventually start to put a floor under home values later this year."

An Upswing in Foreclosures?

U.S. foreclosure activity hit its lowest level since 2007 last year, though experts largely expect it to ramp up this year, putting downward pressure on home prices.

"There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010," said Brandon Moore, CEO of RealtyTrac, in the company's year-end foreclosure report. RealtyTrac also provided a chart for this report.

To compile the list of 10 markets to watch this year, Inman News looked for markets with above-average median sales price growth, a low unemployment rate, a high rate of sales per population, high affordability, low and falling foreclosure activity, a low share of distressed sales, above-average projected job growth, median household income growth, low and falling vacancy rates, growth in the number of building permits issued, above-average population growth, high projected population growth, and a rise in migration from other states.

While no markets on the list fulfilled all of these ideal economic characteristics, they did meet most of them.

Contrary to last year's list, in which most of the resulting markets had populations under 250,000, half of the metros on this year's list had populations above 500,000. This may be partially a result of only considering metros with a population of 150,000 or above, while last year's list did not limit the list by population size.

Among the findings in this report:

• Three of the 10 markets on this list are state capitals, and both Illinois markets benefit from proximity to that state's capital, Springfield.
• Four of the markets: Bloomington-Normal and Peoria in Illinois as well as Des Moines-West Des Moines and Waterloo-Cedar Falls in Iowa, are no more than 300 or so miles from each other.
• Nine of 10 markets had median sales prices below the national median in the third quarter of 2011.
• Where affordability rankings were available, the markets on the list had no less than 73.6 percent of homes affordable to those households earning the area's median income in the third quarter.
• All had unemployment, foreclosure, and vacancy rates lower than the national average. None of the markets had unemployment rates higher than 7.9 percent. All had lower shares of distressed sales than the national average.
• Only two of the markets had populations above 1 million, and three had populations above 500,000. The remainder had populations below that figure, but above a minimum 150,000.
• As in last year's report, jobs in the public sector as well as the health care industry were major employers in most markets. This year, however, nine out of 10 markets also counted manufacturing companies among primary employers. Technology companies, energy providers, and universities also boosted many markets.

The 10 markets are ranked according to population, sales volume, and median sales price appreciation. Population was weighted most heavily in the rankings, followed by sales volume in proportion to population, and rate of price appreciation.

More from Inman News:
9 Markets with Rising Real Estate Value
A House for the Dogs: See Pooch Palaces
Mortgage Rates Probe New Lows

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