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:
Mortgage rates are moving sideways to slightly beter today.
Today's Rate Forecast:
1) The Fed: Wednesday will see their latest Interest Rate Decision and Policy Statement followed by a live presser with Fed Chair Powell. This is not one of the meetings where the economic projections (dot plot charts) are released. The markets do not expect any action out of the FOMC, however bonds will be very sensitive to any discussion (or progression in discussions) around the timing of "tapering" their massive $120B of Treasuries and MBS each month.
2) Inflation: The Fed's preferred key measure of inflation, PCE, will hit on Friday. This is expected to once again be very high with the headline “PCE tipping above 4.0%.”
3) GDP: We’ll get our first look at the 2nd QTR GDP data on Thursday, which is expected to be in the 8.5% range.
Today's Potential Rate Volatility:
This week the market will be waiting for news out of the federal reserve on Wednesday and then reports on Friday. Volatility will likely increase in the latter half of the week.
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.