How Rates Move:
Conventional and Government (FHA 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) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending:
Neutral
Yesterday's MBS market was better by +18 bps. According to Sigma Research
there was high volatility. Yesterday's movement may have
been enough to improve fees. So far today the MBS market is
trading slightly positive (lower rates).
Today's Rate Forecast:
Neutral
Sigma Research says the
April existing home sales were weaker than thought at 5.04 mil annualized against expectations of 5.22 mil; sales were thought to have
increased 0.6% from March but declined 3.3%. According to NAR the
problem is that there is not much inventory out there. While the numbers
are slightly worse than expected they are still very strong sales
numbers. Anything above 5 million is positive for the Real
Estate market. In addition, as noted above, the inventory levels
are very tight which is also helping to drive prices upward. This
news is essentially neutral for rates given it's relatively close to
expectations.
Today's Potential Rate Volatility:
High
According to Sigma Research
the risk for volatility is still high today. We continue to
see wide swings in the MBS market intraday. With the holiday
weekend coming up we expect today and particularly Friday to be
volatile.
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.
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