If you’re in the market for a new home, you’re likely considering shopping around for a mortgage, which means you’ll likely want to know how interest rates for home loans are trending. What you might not know is that mortgage rates can change on a daily basis–sometimes more than once in a single day. This is why we try to share up-to-date mortgage market information with our readers and potential borrowers, to help them make an educated decision when it comes time to float or lock in an interest rate.
In today’s Mortgage Market Update, we’ll review how rates are currently trending, what’s likely in store in the coming week and how likely these trends are to change. But before we begin, here’s a quick reminder of how rates move in the mortgage marketplace.
How Mortgage Rates Move
Conventional and government (FHA, USDA 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. Therefore, mortgage rates or loan fees (also known as mortgage pricing) move throughout the day. Mortgage pricing may be affected by a variety of economic or political events, so if it’s a heavy news week on the national or global scale, you can likely expect the mortgage market to see an impact.
How MBS Pricing Works
When MBS pricing goes up, mortgage rates generally go down. When MBS pricing falls, the opposite occurs and mortgage pricing goes up. Tracking these securities real-time is critical for mortgage professionals who want to stay as current as possible and provide the most accurate and fair pricing on their loan products. It is also important for the consumer to understand how mortgage pricing works and to keep an eye on MBS pricing in order to gauge whether their rate quotes are in line with current trends.
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.
Mortgage Market Update
Rates Currently Trending: Higher
Mortgage rates are trending higher this morning. Last week the MBS market worsened by -2bps. This caused rates to move sideways for the week. We saw relatively mild rate volatility throughout the week.
This Week’s Rate Forecast: Higher
Three Things: These are the three areas that have the greatest ability to impact your mortgage rates this week. 1) Brexit, 2) Trade and 3) Jobs.
1.) Brexit: The European Union has scheduled an “emergency” Brexit meeting for April 10 as Great Britain has failed to pass anything by the March 31st deadline. While, Great Britain has voted to extend the deadline, that deadline cannot be unilaterally extended. Meanwhile, British Prime Minister Theresa May is attempting to hold yet another “indicative” vote on Tuesday, and the House of Commons is looking to plan another round of votes on Monday.
2) Trade: Fresh off of last week’s meetings in China, Chinese Vice Premier Liu He will be visiting Washington on Wednesday for further discussions. Also, on the NAFTA front, the deal that was reached with Mexico and Canada is still not final as it has not passed through our Congress. Canada is balking at some tariffs that are still in place (and were not part of the deal), and Mexico is concerned that the U.S. is going to completely close down the U.S. – Mexico border as a series of “caravans” with thousands of people are attempting to violate our borders.
3) Jobs: There are several key domestic economic reports this week which include ISM Manufacturing and ISM Services, the later representing 2/3 of our economy. However, most of the attention will be on Friday’s big jobs data dump. As far as Non-Farm Payrolls, we want to see just how much last month’s reading of 20K will be revised. But MBS will react the most to the average hourly earnings on a Year-over-Year basis. It is expected to remain at the very lofty level of 3.4%.
This Week’s Potential Volatility: High
While rates are ticking higher today, we’re still at very low levels. Rate markets will be paying close attention to wage growth on Friday. A good number could cause rates to tick higher on elevated volatility.
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. If you’re buying a home in the state of Texas, please reach out to us for information on Texas home financing, including low and zero money down home loans, investment property mortgages, conventional loans and more.