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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:
Lower
Mortgage rates are trending lower this morning. Yesterday the
MBS market improved by +1 bps. This was not
enough to improve mortgage rates or fees. The MBS market
was fairly calm yesterday.
Today's Rate Forecast:
Neutral
Jobs: We had three good jobs related reports today. We started out in the wee hours of the morning with the release of the Challenger Job Cuts. This showed that announced corporate layoffs fell to a 5 month low and saw a very nice drop (65,141 down all the way to 30,157.
Next, we had the ADP Private Payroll report for May which was very close to market expectations (173K v est of 170K) plus April was revised upward by 10K.
Last up were Initial Weekly Jobless Claims which were a tad lighter than expectations (267K vs est of 270K). The more closely watched 4 week moving average dropped from 278.5K down to 276.75K and remains firmly below 280K as a trend line.
The jobs
numbers
overall
are good
for the
economy
and a
slight
negative
for
mortgage
rates.
However,
we
continue
to trade
in a VERY
tight
range. Today's Potential Rate Volatility:
Low
We're looking for another fairly uneventful day in mortgage rates for the rest of the day. No more data today; traders and investors setting up for tomorrow’s May BLS employment report.
Bottom Line:
If you are looking for the risks and benefits of locking your interest rate in today, contact your mortgage professional to discuss it with them.
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