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 trending sideways this morning. Last week the MBS market
improved by +16bps. This caused rates to move sideways last week. We saw
moderate rate volatility for most of the week.
Today's Rate Forecast:
Three Things: These are the three areas that have the greatest ability to move rates this week: 1) Central Bank, 2) Geo-Political, and 3) Domestic.
1) Central Bank: We will get key interest rate decisions and policy statements from 7 of the G20 members and 3 of the top 5 global economies, including the People's Bank of China, The Bank of Japan, and the European Central Bank. Domestically, Former Fed Chair Yellen will begin the Q&A phase of her nomination process through the Senate today.
2) GeoPolitical: Wednesday at noon, President-Elect Joe Biden will take power as the President. The markets on alert for any material disruptions due to protests etc. His 100-day plan, taxes, and stimulus push will have more of an impact on pricing.
3) Domestic: We have a shortened holiday week with plenty of housing news, but Thursday's jobs data will get the most attention from traders.
Treasury Dump: Here is this week's Treasury auction schedule:
01/20 20 year Bond.
Today's Potential Rate Volatility:
Rate markets will be paying very close attention to Janet Yellen's comments today. However, we're not likely to hear anything that will dramatically move rates. Rate markets will also be watching to see if a stimulus bill will make it through congress anytime soon. Look for moderate volatility through the week.
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.