business-charts6-300x199In this week’s Mortgage Market Update, we’ll take a look at how mortgage rates are currently trending, how the situation in the Ukraine is affecting the U.S. market, and how rates are likely to change in the near future. Keep in mind that mortgage rates can change quickly – sometimes more than once per day. If you’re in the market for an affordable mortgage rate anywhere in the state of Texas, please contact The Decker Group for a free mortgage consultation and rate quote.

Mortgage Rates At-A-Glance

  • Currently Trending: SLIGHTLY LOWER
  • 7 Day Forecast: NEUTRAL TO HIGHER
  • 7 Day Rate Volatility: HIGHLY VOLATILE

Last week saw MBS (mortgage-backed securities) improve +76 basis points for the week on a stretch that broke us out of the trading channel we had maintained for nearly two weeks. This improvement was enough in the MBS market to see rates improve an average of .125% among lenders, as well as to see an improvement in rebate pricing. Rebate pricing refers to the credit a lender gives towards closing costs, or the cost to obtain a better rate, commonly referred to as “points.”

The Crisis in the Ukraine and What it Means for the U.S. Mortgage Market

The lack of economic data released last week indicates that the rate gains were due to the crisis in the Ukraine. In what’s been called the “worst crisis in Europe in the 21st Century,” the situation in the Ukraine has had far reaching effects, one of which is actually aiding the U.S. mortgage rate market. The political and social unrest has caused a “flight to safety” phenomenon, which typically occurs whenever investors are more concerned about protecting themselves from risk than they are with making money. During these scenarios, investors often move to investments where they are the least likely to experience a loss, such as bonds and U.S. Treasuries and MBS. While MBS have slightly higher risk than Treasuries, they typically have a better yield.

Rate Forecast

Rates are probably going to either stay neutral or fall lower in the near future, but volatility levels are high. We are likely to see MBS continue to improve as the U.S. and overseas markets struggle due to the crisis in the Ukraine. However, the U.S. Treasury and MBS markets are currently oversold, and a reversal must occur. This is not an “if” but a “when.” Therefore, while it’s fine to enjoy these improvements, consumers should be prepared to act quickly at signs that it is turning around. Once investors regain security with the Ukrainian situation and the flight to safety comes to an end, we will most likely see rates go higher.

Be sure to check back next week as we continue to publish updates on economic conditions and the mortgage market.