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
-6 bps yesterday. This
caused rates or fees to move sideways for the day.
The rates experienced moderate volatility yesterday.
Today's Rate Forecast:
Jobs: Its Big Jobs Friday!!! The Bureau of Labor and Statistics released its Employment Situation for November, and it was a big-time beat.
Here is the Tale of the Tape:
- November Non-Farm Payrolls 266K vs. an estimate of 180K
- October NFP revised upward from 128K to 156K
- September NFP revised upward from 180K to 193K
- The rolling three-month average is now a robust 205K
- Average Hourly Earnings rose by 7 cents to $28.29
- Average Hourly Earnings increased by 3.1% on a YOY basis vs. an estimate of 3.0%. Last month was revised upward from 3.0% to 3.2%
- The Headline Unemployment Rate dropped to 3.5% vs. an estimate of 3.6%
- The U6 Unemployment Rate fell from 7.00% down to 6.90%
- The Participation Rate dropped from 63.3% to 63.2%
- Consumer Sentiment: The Preliminary December release was much stronger than expected (99.2 vs. an estimate of 96.5)
Japan: Leading Economic Index 91.8 vs. est. of 92.0
Germany: Industrial Production -1.7% vs. est. of 0.1%
Canada: Unemployment Rate 5.9% vs. est. of 5.5%
Today's Potential Rate Volatility:
Typically, after such a robust jobs number, rates would've jumped on a great deal of volatility. Instead, we see rates continue to trade in a very tight channel. The reason is simple, trade. The market is completely focused on trade and the lack of a deal. As long as the market continues to focus on trade and a deal remains elusive, rates will remain historically low.
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.