|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
Sigma Research said that rates are trending a little worse this morning. Last week the MBS market lost -130 BPS. This was enough to worsen mortgage rates. Today we’re starting off slightly better, but we have a lot of ground to make up to get pricing to the beginning of last week.
Today’s Rate Forecast: Neutral
According to Sigma Research the MBS market has turned bearish (negative for rates) after last week’s drop. The employment numbers Friday was the big reason for the change in outlook. A lot of numbers were thrown at us, but the big market mover was the average hourly earnings. It was expected that average hourly earnings would increase by about .2% after the decline in Dec. However, it was up by .5% helping to push aside deflation fears and showing the US economy still has a little heat.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility is high today and this week. The oil market continues to be a market mover and of course the Greek debt crisis can and will cause volatility in the MBS and stock 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.