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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
Sigma Research said
that rates are trending essentially unchanged this morning.
Yesterday the MBS market
worsened
by -23 bps. This was enough to affect rates or fees. There
was high volatility yesterday.
Today's Rate Forecast:
Neutral
According to Sigma Research
says today more negative economic news from China, the world’s second largest economy; China’s official manufacturing purchasing managers index for August fell to 49.7, from 50.0 in July, marking its lowest level since August 2012. A number below 50.0, just like our ISM index, implies a contraction.
This is helping to prop of up the MBS market a bit this morning
(lower rates). US July construction spending expected to have increased 0.8% was up 0.7%, June spending was revised
from +0.1% to +0.7%. The economy around the world is showing
slow down. The one bright spot are developing nations with
a lower cost basis for manufacturing. This is helping to
keep mortgage rates low, however it's hard to imagine mortgage
rates going much lower in the near future even in light of the
negative global economic news.
Today's Potential Rate Volatility:
High
According to Sigma Research
we will continue to see volatility throughout the week. We
continue to trade in a tight range with high intraday mortgage rate
movements and we don't expect that to change this week.
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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