In our latest Mortgage Market Update, we’ll take a look at how rates are trending and identify a few key influences that could shape the path of rates into the near future.
But first, a reminder on how rates move:
Conventional and government lenders base their rates on Mortgage Backed Securities (MBS) pricing. MBS are traded in real time throughout the day in the bond market. This means rates or loan fees (mortgage pricing) changes throughout the course of a day and can be affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally declines. When they fall, mortgage prices typically go up. Tracking these securities real-time is of the utmost importance. For more information about the rate market, contact me today. I’m one of the few mortgage professionals who has access to live trading screens during market hours.
Rates Currently Trending: NEUTRAL
Mortgage rates are trending sideways to moderately higher so far today. Last week, the MBS market improved by +24bps. This was enough to slightly improve mortgage rates or fees. Mortgage rate volatility was high last week.
This Week’s Rate Forecast: NEUTRAL
Three Things: These Three Things have the greatest ability to move mortgage rates this week. 1) Geopolitical, 2) Across the Pond and 3) Fed.
1.) Geopolitical: Domestically, the bond markets will continue to pay close attention to movement in tax reform and health care. Overseas, North Korea is still a hot spot but so is Israel (recent military action) and Iran (Trump decertified deal and sent back to Congress). Catalonia is also on the radar with it’s attempted split with Spain.
2.) Across the Pond: The economic data this week with the gravitas to move markets is coming from overseas this week. We have already received higher than expected inflationary data out of China and stronger production data out of Japan. For the rest of the week, we will be focusing on Brexit negotiations which appear to be going the wrong direction for Great Britain and may lead to Prime Minister May being ousted as a result. China’s retail sales and GDP will get a lot of attention this week.
3.) Fed: We have a few speeches this week, but the bond market will focus on the Beige Book on Wednesday which is prepared specifically for the use in the next Fed meeting in two weeks.
- 10/16 Neel Kashkari
- 10/18 Stanley Fischer, William Dudley, Robert Kaplan, Atlanta Business Inflation and the Beige Book
- 10/19 Philly Fed Business Outlook
- 10/20 Loretta Mester
This Week’s Potential Volatility: LOW
There’s not a lot of market moving news due out this week. Mortgage rate volatility will be mostly impacted by geopolitical events noted above.
What’s the Bottom Line?
If you’re 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’re searching for home financing in the state of Texas, connect with us today to browse our selection of mortgage options and receive a free rate quote. Call (972) 591-3097 today or fill out the form on this page to get started.