|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 +36 bps. According to Sigma Researchthere was high volatility. Yesterday’s movement may have been enough to improve rates or fees. So far today the MBS market is trading negative (worse rates).
Today’s Rate Forecast: Neutral
Sigma Research says that nothing is happening domestically today to move the market significantly. As a result, the market is going to turn it’s focus overseas. Greece is out today saying it will meet the deadline on June 5th to make the next payment to the IMF because it will have reached a deal with its creditors by then. The past two sessions Europe’s stock markets were under pressure as the fast approaching June 5th for the payment didn’t look promising, today after Greek officials commented Europe’s equity markets doing better. Greece will muddle along until late July before it either has a workable and agreeable long plan or has to leave the EU. In the meantime each event that unfolds keeps markets jumpy. US bonds benefited yesterday on never-ending fears that Greece might not meet the June 5th payment.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility is still high today. While there’s not a lot of news domestically do out to push the market significantly, we do have the Greece deadline fast approaching and a high likelihood of significant volatility as news is released.
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.