This week’s Mortgage Market Update will look at what’s keeping rates trending neutral, how rate movement is expected to change in the upcoming week and how drastically rates may change. Fortunately, data points to low volatility; however, global issues could have the potential to alter rates in the near future.
Before we dive in, let’s offer a quick refresher on how mortgage rates move.
How (and Why) Mortgage Rates Change
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. This means rates or loan fees (mortgage pricing) can move and change throughout the day, being affected by a variety of economic or political events.
When MBS pricing goes up, mortgage rates or pricing almost always goes down. When they fall, mortgage pricing typically goes up. Being able to track the real-time changes in these securities is of the utmost importance for anyone who wants to stay tuned in to the market. For more information about current mortgage rates, contact us directly. We are among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Neutral
Mortgage rates are trending sideways so far today. Last week the MBS market improved by +18bps. This may’ve been enough to move rates slightly lower. Rates continue to move mostly sideways on very low volatility.
This Week’s Rate Forecast: Neutral
Three Things: These are the three areas that have the greatest ability to move rates this week. 1) Trade Wars, 2) Geopolitical, and 3) Manufacturing.
1) Trade Wars: In a rare confirmation directly out of China’s controlled news outlet, the South China Morning Post, reported that Chinese Vice Premier Liu He will visit Washington this week to sign the “phase one” trade deal with the U.S.
2) Geopolitical: The U.S. has launched strikes in Syria and Iraq over the weekend, and the markets will be watching to see if this remains a surgical and isolated campaign or turns into something bigger.
3) Manufacturing: We get two key reports this week with Monday’s Chicago PMI and Friday’s ISM Manufacturing report. Friday’s report will carry much more weight.
This Week’s Potential Volatility: Low
We’re not likely to see much rate volatility heading into the new year. We could see rate volatility spike toward the end of the week with the “phase one” trade deal signing and manufacturing numbers.
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 are searching for competitively priced mortgage solutions in the state of Texas, please don’t hesitate to connect with us. We offer a selection of low and no money down mortgage options, conventional home loans, jumbo loans and more. Explore our mortgage programs today online or give us a call at (972) 591-3097