|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
Sigma Research said that the MBS market is a little worse this morning (slightly worse rates). Last week the MBS market lost -10 bps. This was more than likely not enough to affect rates or fees. We continue to trade in a very tight range.
Today’s Rate Forecast: Neutral
According to Sigma Research the main financial event this week is the FOMC policy statement on Wednesday at 2:00 PM EST. There are no major data points today. No real changes over the weekend in Greece/EU attempts to work out a deal to get funds to save it from default. Weekend polls showed a majority of the country’s people (Greeks) want the government to make compromises needed to release funds for its economy. Housing will once again be on the radar with Case-Shiller Home Price Index Pending Home Sales on Wednesday. Last weeks home sales were much stronger than expected, but we’ll be keeping an eye out to see if it will continue.
Today’s Potential Rate Volatility: Average
According to Sigma Research the risk for volatility is average today and this week. The MBS market has been much calmer as of late. The big news is likely to be the FOMC policy statement as denoted above and could cause some movement in the mortgage rate market.
Bottom Line: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.