In this week’s Mortgage Market Update, we see why rates are currently trending higher and how uncertainty in key economic factors could signal higher volatility in the coming days. But before we dive into the latest mortgage rate trends, lets’ review how rates move in this market.
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. This means rates or loan fees (mortgage pricing) can move throughout the day, being affected by a variety of economic or political events.
When MBS pricing rises, mortgage rates generally move down. When MBS pricing falls, mortgage rates typically goes up.
Tracking these securities real-time is critical. For more information about the rate market, contact my team of mortgage professionals. We are among the few mortgage lenders who have access to live trading screens during market hours.
Rates Currently Trending: HIGHER
Mortgage rates are trending higher so far today. Last week the MBS market improved by +3bps. This moved mortgage rates sideways last week. Mortgage rate volatility was relatively low last week.
This Week’s Rate Forecast: HIGHER
Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week: 1) Geopolitical, 2) Central Bank and 3) Jobs.
1) Geopolitical: Tariffs and NAFTA. We still do not know the full specifics of the newly proposed tariffs. The bond market will be focusing on what “waivers” are issued, and to which companies/countries. Also, it is now very clear that tariffs on steel, etc. are being used as leverage on this week’s NAFTA negotiations. Bond traders will closely monitor responses from other trading partners and more details from Washington.
2) Central Bank: The spotlight is on Thursday’s European Central Bank meeting as the ECB will give us their latest interest rate decision and policy statement. Last week, Japan surprised markets by hinting at ending QE sooner than expected and on Friday will get the BofJ’s interest rate decision and policy statement on Friday. We will also get the Bank of Canada’s interest rate decision and policy statement.
3) Jobs: We get a lot of job and wage-related data almost every day this week either as an official headline release or an internal component of another type of economic release. Friday’s YOY change in the Average Hourly Wage data will have more impact on rates than any other piece of jobs related data.
Fed: On Wednesday we get their Beige Book which is prepared specifically for the March FOMC meeting where it is widely expected that they will raise their Fed Fund Rate.
03/05 Randal Quarles
03/06 William Dudley, Lael Brainard, and Robert Kaplan
03/07 Raphael Bostic, Beige Book
03/09 Charles Evans
This Week’s Potential Volatility: HIGH
Mortgage rates could be very volatile this week with the steady flow of jobs numbers, Central Bank meetings, and tariff talks. Due to uncertainties in several of these economic factors, it is currently hard to tell which way mortgage rates will move within the next few days. And whenever there in uncertainty in the market, volatility tends to increase.
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.
Looking for a mortgage in the state of Texas?
We’re able to help Texas home buyers and homeowners find the right financing for their needs at competitive rates. We offer a full selection of financing options, including conventional 30 year fixed rate mortgages, government-backed FHA loans, low and zero money down options and many more. Reach out to us today to learn more about our Texas home loan offerings and receive a free rate quote: (972) 591-3097