|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: Lower
According to Sigma Research, the bond markets opened slightly weaker this morning after yesterday’s strong price gains. MBS prices were up +46 bps yesterday, leading to lower rates today. The technical outlook is still bullish (lower rates).
Today’s Rate Forecast: Lower
According to Sigma Research, interest rates fell yesterday after the FOMC’s comments in their policy statement. According to the statement, there are no concerns about inflation, partly because of declining oil prices. Mortgage bonds are down slightly at the open, which is to be expected after yesterday’s gains. It was the currently bearish US stock market and declining inflation readings here and globally that drove interest rates lower. Expect better mortgage rates today because of yesterday’s strong rally.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility is high today. The volatility in the markets is driven by wide swings in the economic reports. Weekly jobless claims were expected to be down 7k to 300k, as reported claims declined 43k to 265k, the lowest level of claims since April 2000.
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.