In today’s mortgage market update, we’ll look at how rates are trending and which economic developments could impact the direction rates take in the future. Before we dive in to the latest mortgage rate forecast, let’s review how rates move.

How Mortgage Rates Move

Government and conventional lenders both set their loan pricing based on the pricing of Mortgage Backed Securities (MBS), which are traded in real time, all day, on the bond market. Therefore, rates (also referred to as mortgage pricing) can move throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage pricing generally goes down. When MBS pricing drops, mortgage rates typically move up. Having the ability to track these securities in real time is critical for keeping up to date on the latest mortgage pricing trends, down to the minute. For more information on the rate market, feel free to contact us directly. My team is one of the few mortgage professionals who have access to live trading screens during market hours.

Mortgage Market Update

Rates Currently Trending – NEUTRAL

Mortgage rates were trending sideways to slightly higher this morning. Last week the MBS market worsened by -22bps. This moved mortgage rates slightly higher last week. Mortgage rates have been moving mostly sideways the last week.

This Week’s Rate Forecast – NEUTRAL

Three Things: These are the three areas that have the greatest potential to impact mortgage rates this week. 1) Across the Pond, 2) Fed and 3) Geopolitical

1) Across the Pond: We get some economic releases that have some real “heft” to them from world’s top economies this week. Generally, the stronger these reports are, the worse it is for mortgage rates and vice versa. China – Retail Sales, Industrial Production. Japan – GDP, Industrial Production, CPI. Germany – GDP, CPI, PPI. Eurozone – GDP, CPI, and a Non-Monetary ECB Meeting. We actually will hear from quite a few voting members of the ECB this week. We started off with ECB member and Bank of France governor, Francois Villeroy de Galhau. He insisted that despite sluggish inflation, the governing council is set to stick with the plan and end QE over the near term, citing September or December as the likely cutoff point and warning that the first rate hike could come quarters, not years after the end of asset purchases.

2) Fed: We will get a lot of speeches from both voting and non-voting members of the FOMC. The aggregate tone of their speeches can shape markets.

05/14 Loretta Mester, James Bullard
05/15 Robert Kaplan. John Williams
05/16 Raphael Bostic, Atlanta Fed Business Inflation Expectations, Jame Bullard
05/17 Philly Fed Business Outlook Survey, Neel Kashkari
05/18 Lael Brainard, Robert Kaplan

3) Geopolitical: NAFTA will get the bulk of attention from bond traders as the May 17th deadline imposed by Speaker Paul Ryan is fast approaching. Italy will continue to be a concern for the Eurozone/ECB. Trade with China continues to be closely watched as President Trump said he is working with the Chinese President, Xi to start to ease up on exports to ZTE. Also, China’s Vice Premier Lie He is traveling to Washington to continue talks with Treasury Secretary Steven Mnuchin.

This Week’s Potential Volatility – AVERAGE

Mortgage rates are likely to see some volatility, due to the economic data we’ll be receiving from overseas this week. If those numbers are in line with expectations, look for rates to once again move sideways with relatively low volatility.

Bottom Line

As always, if you’re a potential home buyer or thinking of refinancing the mortgage on your existing home, it’s best to talk to your mortgage professional about weighing the pros and cons of floating your loan rate versus locking one in.

If you’re looking for a mortgage professional in the state of Texas, please don’t hesitate to connect with us today. We’ll be happy to answer any questions you may have and we can provide you with a free, no-obligation Texas mortgage rate quote. Simply call us at (972) 591-3097 or send us your information via the online form on this page. Once someone from our team reviews your information, we will reach out to you with today’s pricing.