|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 -4 bps. According to Sigma Research there was moderate volatility. Yesterday’s move was more than likely not enough to affect interest rates or fees. What we suggested might happen is happening. The MBS market is down significantly this morning after the employment numbers were announced. This is negative for mortgage rates and could result in higher rates and fees.
Today’s Rate Forecast: Higher
Sigma Research says that employment numbers came in better than expected. The consensus estimate (if there is such a thing) was for job growth in the 230K to 240K range, as reported jobs increased 295K, private jobs also much stronger than expected, up 288K. The unemployment rate was thought to be 5.6% from 5.7% in Jan, unemployment fell to 5.5%. These numbers, along with a few others, were better than expected which is causing mortgage rates to rise this morning. As we’ve been saying, this was big day to determine medium term direction of mortgage rates and thus far it’s negative for mortgage rates.
Today’s Potential Rate Volatility: High
According to Sigma Research the risk for volatility for today is high. The volatility we were expecting is happening and we expect it for the rest of the day.
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.