|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 said rates are trending a worse this morning. Last week the MBS market worsened by -28 bps. This was probably enough to affect rates or fees. The market was extremely volatile last week.
Today’s Rate Forecast: Higher
According to Sigma Research the MBS market worsened some last week, but it was a wild ride. This week will continue the volatility with wide trading ranges for MBSs and Treasuries. This week has three housing reports, and three reports on the manufacturing sector. It is a holiday week with Memorial Day next Monday, the bond and mortgage markets will close at 2:00 pm on Friday and all markets closed next Monday. Trade volume already razor thin will be even more so as the week progresses. Keeping everyone in their seats on Friday, Janet Yellen will speak on the economy at 1:00 pm Friday afternoon; she recently mentioned that a bubble may be forming in the US stock market, and was criticized for commenting directly on markets.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility is high today and this week. As stated above, the market is heading into a three day weekend and because of that the market is libel to be a little more volatile. However, it’s hard to imagine the market can get any crazier than last week.
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.