|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: Higher
Yesterday’s MBS market was worse by -13 bps. According to Sigma Research there was high volatility. Yesterday’s move was not likely to have a major effect on rates. This morning the MBS market is slightly better.
Today’s Rate Forecast: Higher
Sigma Research says that the overall economic data that came out this morning was weak. Dec. retail sales were disappointing with weak Dec. sales and now weak January sales down .8%. This is helping the MBS market realize some slight gains this morning (better rates). However, the market continues to be in a bearish trend (worse rates). The conflict in the Ukraine continues to be in the news, but doesn’t seem to have nearly the impact on mortgage rates it once had when the fear of a cold war with Russia was on investors minds.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility remains high, but does seem to be calming a bit. The economic numbers this morning would normally cause some significant volatility, but so far that doesn’t seem to be the case. However, the day isn’t over and we’ll be keeping an eye on the market.
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.