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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 +70 bps. According to Sigma Research
there was high volatility. Yesterday's more than likely was enough to
improve rates or fees. So far today the MBS market is
slightly
lower (worse rates).
Today's Rate Forecast:
Neutral
Sigma Research says some less concerns today abut Greece; not much and likely won’t end up leading anywhere. Last night EU commission president Jean-Claude Juncker made an overture to Greek Prime Minister Alexis Tsipras about a marginally sweetened financing offer that would require the Greek government to campaign in favor of creditors’ demands in the country’s July 5 bailout referendum. Germany and the IMF have said they went as far as they could last week in loosening the economic-policy conditions attached to Greece’s bailout program.
Greece and the outcome has the markets by the throat. There's really
nothing else the markets are looking at for direction. As a
result, we're going to continue to have large swings in the MBS market
until this gets resolved. Which direction this ultimately heads is
anyone's guess.
Today's Potential Rate Volatility:
High
According to Sigma Research
the risk for volatility is high today. As noted above, the
market is completely focused on Greece and mortgage rates swing based on
every new news release. This will continue until there's a
resolution.
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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