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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 +14bps. According to Sigma Research
there was low volatility. Yesterday's move may've been enough to
improve rates or fees. So far today the MBS market is
trading basically unchanged.
Today's Rate Forecast:
Neutral
Sigma Research says we're not surprised treasuries are weaker this morning heading into the FOMC meeting today and tomorrow.
More selling in China’s stock markets today but US markets kind of shrugging it off for now. Most all attention today and tomorrow is on what the Fed will say in the policy statement regarding the intent to increase interest rates this year. The Fed,
from Yellen to most all regional Fed presidents have painted themselves into the proverbial corner with months of warnings interest rates will be increased in Sept (or Dec); not an easy corner to back out of. Most of those we hear on news media are expecting the first increase in Sept; although the FF futures market sees only a 17% probability----the difference between talking and acting.
Most all commodity prices continue to decline; hard to overlook it as another indication of global slowing.
The Fed wants 2.0% inflation, that isn’t happening. The Fed continually touts the decline in unemployment as the trump card for considering increasing rates. No one, the Fed or about any other economist, has squarely faced the quality of most of the jobs being created.
Oil and other commodities slide, examined in a bubble, is typically good
for mortgage rates.
Today's Potential Rate Volatility:
Moderate
According to Sigma Research
the risk for volatility is moderate. With the FOMC speaking today
we may see some market moving news, but we aren't expecting it. We
believe that it will be more of the "Fed Speak" that gives everyone what
they want to hear.
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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