|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: Neutral
Yesterday’s MBS market was better by +38 bps. According to Sigma Research there was moderate volatility. Yesterday’s move may’ve been enough to have an affect on rates or fees. The market is basically unchanged this morning.
Today’s Rate Forecast: Neutral
Sigma Research says that the Durable Goods Orders was a pretty big miss. Feb durable goods orders were thought to be up 0.7%, as released orders dropped 1.4%. Excluding the volatile transportation orders, expected up 0.3% but reported down 0.4%. Jan orders originally reported at +2.8% were revised lower to 2.0%. Basically these numbers point that the MBS market should’ve pushed higher this morning (better rates), but we just didn’t get that much of a reaction. The reason we point to this is two fold. First, the Durable Goods Orders have been very volatile and the market is not sure what to make of it. Secondly, the market is pointing a lot of it’s focus on Greece which continues to be a big concern which is helping to keep mortgage rates lower. We’ve seen a fairly significant push higher in the MBS market (better rates) over the last week or so and in the near term it appears that the market if still pointing in that direction. However, we can have a slight pull back at anytime.
Today’s Potential Rate Volatility: Average
According to Sigma Research the risk for volatility for today is average today. Things seem to be calming down a bit, which is a welcome change and we’re not expecting any big move to push mortgage rates out of their new channel.
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.