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 so far today.
The MBS market worsened by
-5 bps yesterday. This
caused rates or fees to mostly move sideways for the day.
The rates experienced low volatility yesterday.
Today's Rate Forecast:
Jobs: The June Challenger Job Cuts report showed a significant drop in announced corporate layoffs from a pace of 397K in May down to 170K in June. The June ADP Private Payroll report showed a monthly gain of 2.369M vs. est. of 3.000M. However, the prior month was revised by 5M jobs from -2.760M up to +3.6065M.
Manufacturing: The national ISM Manufacturing Index for June cracked back into expansionary territory with a reading of 52.6 vs. est. of 49.5, Prices Paid were 51.3 vs. est. of only 43.0, but the Employment Index was very low at 42.1.
Construction Spending: The May reading dropped by -2.1% vs. an estimate for a gain of +1.0%.
The Fed: We will get the Minutes from the last FOMC meeting at 2:00 PM ET today.
Coronavirus: Here are this morning's headlines that are getting economists/bond traders' attention today.
U.S reports 48K new cases, has had more than 40K new cases 5 out of last 6 days.
- Australia puts 300K under lockdown in Victoria.
- Dr. Fauci warns that U.S. will trend from the current 40K per day to 100K per day if the U.S. does not put restrictions back on.
- Global cases at 10.5M
- Google announces that all campus and offices will be closed until at least Sept 7.
- Covid-19 cases have doubled in 14 states in June.
- NYC delays return of indoor dining
Today's Potential Rate Volatility:
We received some good jobs data, but it's not the driver of rates today. The markets are focusing on the reemergence of coronavirus cases and fears. Look for rates to move sideways once again today on low volatility.
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.