|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: Higher
Yesterday’s MBS market was worse by -42 bps. According to Sigma Research there was high volatility. This morning the MBS market is continuing the downward slide (worse rates).
Today’s Rate Forecast: Higher
Sigma Research says that the elements that pushed interest rates lower have changed, at least for the moment; the dollar is softening, crude oil is increasing and recent data from Europe has been better than expected. Weekly claims at 8:30 AM EST were a little better than expectations but overall not deviant. This is starting a potential trend reversal in interest rates. We’re not there yet, but we are headed in the wrong direction.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility is high today. We had couple of days of average volatility and now we’re back to the new normal. The good news is that volatility has been in the right direction before yesterdays move.
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.