|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
According to Sigma Research, mortgage bonds improved +25 bps from last week. This caused rates to improve slightly from the previous week. New York is bracing for a major blizzard. This could cause trading to be thin as traders stay home.
Today’s Rate Forecast: Neutral
According to Sigma Research, MBS prices opened lower than Friday’s close, but had recovered slightly by 9:30. There is nothing on the calendar today, although the critical FOMC meeting beginning tomorrow could move rates when the report of the meting is released on Wednesday afternoon. The market does not seem too concerned about the Greek election, which came out about as expected. There is some conjecture that Greece may leave the EU.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility is high today. With the impending blizzard, the anticipated thin trading volume could lead to wider than average swings in price.
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.