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 slightly lower this morning. Last week the MBS market improved by +57bps. This may've moved mortgage rates lower last week. Mortgage rate volatility has really picked up the last few trading days. Today's Rate Forecast: Lower Three Things: These are the three areas that have the highest ability to impact mortgage rates this week. 1) Geopolitical, 2) Domestic and 3) Fed. 1) Geopolitical: There is plenty of global concern to go around. Italy has imploded and threatens to take the EU down with it. U.S. / China concerns mount as the U.S. will now have a 25% tariff on Chinese technology goods, military escalations with Israel and Iranian backed forces, Brexit up in the air and we have the G7 meeting...just to name a few areas of concern this week :) 2) Domestic: We do get some significant domestic releases this week. The first revision (2nd release) of the 1st QTR GDP will get some attention, but the two most important data points are Thursday's PCE and Friday's Jobs/Wage data. 3) Fed: We will get their Beige Book which is prepared by all 12 Fed districts to be used at the next Fed meeting. But we also get the release of their proposed changes to the Volker Rule. Today's Potential Rate Volatility: Average Mortgage rates have consistently been moving lower the last week with increased volatility. This is mostly due to the geopolitical events. Look for much of the same this week with the added wild card of some significant economic releases noted above. 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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