|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 +10 bps. According to Sigma Research there was moderate volatility. Yesterday’s move probably won’t have an affect on rates or fees. The market is slightly better this morning.
Today’s Rate Forecast: Neutral
Sigma Research says that the focus has moved from the Fed and is now moving to overseas activity. This includes Greece and their ability to repay their debt. It’s becoming more of a belief that the country has a 50/50 chance of leaving or getting kicked out of the Euro Zone. This is helping to prop up MBS securities a bit which is good for mortgage rates. In addition to the overseas issues, there’s a bit of inflation creeping in, but nothing to worry about as of yet as it pertains to mortgage rates. Germany is showing signs of strength in their economy as well. On the flip side, China’s manufacturing slipped to a 11 month low. The weakness is marginally better for mortgage rates. The offsetting news is likely to keep mortgage rates in a tight channel for now.
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 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.