|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 +19 bps. According to Sigma Research there was moderate volatility. Yesterday’s move probably wasn’t enough to significantly affect rates or fees.
Today’s Rate Forecast: Neutral
Sigma Research says that the Nationwide Insurance in Columbus Ohio came out with its data release. The national Leading Index of Healthy Housing Markets rose to 109.8 in the fourth quarter. Values greater than 100 indicate a robust industry. The index uses local data in 373 metropolitan statistical areas that are underlying drivers of the housing market, including measures on employment changes, demographics and the mortgage market. Nationwide’s data is interesting, its data called the housing bubble back in 2005, well before Case/Shiller saw it coming. There was some employment data that came out today, none of it was a terrible surprise nor is it having an affect on mortgage rates.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility for today is high today. While there’s not a lot of data due out for the rest of the day that would cause the market to make a big move, we’re still going to caution for high volatility. Simply because of the overseas matters we’ve been talking about and because the market hasn’t needed a lot of news to make a big move during the day as of late.
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.