In our latest Mortgage Market Update, we’ll take a look at how today’s mortgage rates are trending and what borrowers (and lenders) can likely expect in the days to come.

Before we dive in, let’s review how interest rates move.

Mortgage Pricing & How it Moves

Conventional and Government (USDA, FHA, and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS). MBS are traded in real-time, throughout the day in the bond market.  This means mortgage pricing does not remain stationary. In fact, rates and loan fees can move frequently throughout the day, being affected by a variety of economic or political events.

As the MBS prices rise, mortgage rates generally go down. When MBS pricing declines, mortgage pricing usually goes up. Tracking these securities in real-time is critical for lenders who want to stay on top of the most competitive pricing strategies.

For more information about the rate market, contact our team directly. We are among the few mortgage professionals who are able to access live trading screens during market hours.

Mortgage Rate Trends & Forecast

Rates Currently Trending: Neutral

Mortgage rates are trending sideways so far today.  Last week the MBS market improved by +24bps.  This was enough to move rates or fees lower last week. We saw moderate rate volatility throughout the week.

This Week’s Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1.) Stimulus, 2.) Coronavirus and 3.) Domestic

1) Stimulus: President Trump has signed an Executive Order designed to get around the impasse between the Senate and House in competing for stimulus bills. His order would reinstate the “helicopter money” for those who are unemployed and replace their $600 weekly checks with $400 weekly checks. It also includes a “payroll tax holiday” for those making less than $100K per year and eviction stays for those not making rent payments. Many expect legal challenges to this recent order.

2) Coronavirus: The Covid-19 pandemic continues to grow. Its economic impact is still the primary concern of long bond traders with the consensus of further deterioration of economic conditions and not a “v” shaped recovery. Here are the key headlines to set the table for the week:

  • Global Cases at 20M, Deaths at 732K
  • U.S. Cases at 5M, Deaths at 163K
  • WHO warns “a majority of the world still susceptible” to COVID
  • California has now approved a pilot plan to pay $1,250 to anyone who tests positive for coronavirus to encourage them to “stay at home and self-isolate.”
  • Texas 7-day average positivity rate hits new high at 20.3% (1 in 5 people)
  • Greece, Germany, and other EU nations are seeing a resurgence of cases, with new spikes in numbers.

3) Domestic: The two biggest reports of the week are Initial Weekly Jobless Claims and Retail Sales. We also get key inflationary readings with PPI and CPI.

Treasury Dump: Here is this week’s Treasury auction schedule:

  • 08/11: 3-year note
  • 08/12: 10-year note
  • 08/13: 30-year bond

This Week’s Potential Volatility: Average

Rate volatility could be elevated this week with all of the economic data scheduled for release, particularly the inflation data Friday. Markets will also be paying very close attention to the stimulus developments.

Bottom Line:

If you are comparing the risks and benefits of locking in your interest rate today or floating your loan rate, contact your mortgage professional to discuss it with them.

If you’re searching for home financing in the state of Texas, please reach out to us today for information on our loan programs and a free rate quote.