|How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Lower
According to Sigma Research, President Obama’s State of the Union message generated no reaction in the markets, which opened essentially flat from yesterday’s close.
Today’s Rate Forecast: Lower
According to Sigma Research, the DJIA opened -96, mortgage bonds opened -3bp, which will cause rates to be unchanged from yesterday. The Greek elections coming up could determine he country’s future within the Eurozone. That country’s economy has shrunk 25% since its peak in mid-2008. This, along with the rest of the soft global economy, is a major component that supports low rates in the U.S. MBA says mortgage applications increased again–14.2% from one week earlier. This is not surprising, given the rapid drop in interest rates recently, which presents opportunities for homeowners to reduce their interest rates. Conventional refinances increased 21% from the previous week.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility is high today, although the technical picture still looks good. Both 30 year MBS and 10 year Treasuries are technically overbought in the near term, which means the market could be ripe for a bit of a correction soon.
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.