In this week’s Mortgage Market Update, we’ll examine three key events that have the greatest possibility to impact interest rates. We’ll also see how the market’s volatility is looking for the week ahead.

But first, let’s review how mortgage rates move throughout the day.

Conventional and government (FHA, VA, USDA) 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) changes throughout the day, and may be affected by any number of economic or political events.

When MBS pricing is on the rise, mortgage rates generally move down. When MBS pricing is on the decline, mortgage rates typically go up. Tracking these securities real-time is very important for industry professionals and consumers alike. For more information about the current rate market, contact us directly. We are among few mortgage professionals who have access to live trading screens during market hours.

Mortgage Market Update – October 1, 2018

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning. Last week the MBS market improved by +9bps. This was not enough to move rates lower last week. There was a good deal of mortgage rate volatility last week.

This Week’s Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact mortgage rates. 1) Jobs 2) Trade Wars and 3) The Fed.

1) Jobs: We have no less than 12 different economic releases that address the labor market (jobs, wages, etc). Friday’s employment situation will get the most weight with bond traders giving the YOY average hourly earnings the most attention. The estimates call for a 2.8% to 3.0% range, anything above 2.9% will be negative for mortgage rates.

2) Trade Wars: NAFTA has been replaced with a last-minute agreement between Mexico, Canada, and the U.S. called USMCA. This agreement must still be approved by Congress. The spotlight continues to be on the China vs. U.S. Trade War.

3) The Fed: After last week’s Fed meeting, the blackout period of Fed Speeches is over, and we will hear from a lot of FOMC members this week:

10/01/18 – Raphael Bostic, Neel Kashkari and Eric Rosengren
10/02/18 – Fed Chair Jerome Powell, Randal Quarles
10/03/18 – Charles Evans, Tom Barkin, Patrick Harker, Loretta Mester

This Week’s Potential Volatility: Average

Mortgage rates are likely to move sideways in this new channel through Thursday. Friday, with the jobs data, we could see some rate volatility if the markets are surprised.

Bottom Line:

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 home financing in the state of Texas? Connect with us today to learn more about our Texas home loans and request a free, no-obligation rate quote. Call (972) 591-3097 to get started.