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: Neutral Mortgage rates are trending sideways this morning. Last week the MBS market worsened by -1bps. This was not enough to move rates higher last week. There was a great deal of mortgage rate volatility last week. Today's Rate Forecast: Neutral Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week. 1) Trade War, 2)Geopolitical and 3) Across the Pond. 1) Trade War: Now that the metal Tariffs are in place, the bond markets will continue to monitor the non-stop trickle of "tit-for-tat" responses from the impacted countries. But foreign tariffs on bourbon, soybeans and other small target but big headline moves are not going to move rates. Instead, the bond markets are solidly focused on China and trade talks there. 2) Geopolitical: While Spain and Italy seemingly have new governments in place, there is still plenty of unrest and instability in the Eurozone. And no one has a plan to solve the massive amounts of debt problems. Most of that debt is owned by European banks or the ECB itself. And unlike Greece, these are much more threatening to the system. 3) Across the Pond: Domestically, we have a very light week for data and zero Fed speeches or Treasury Auctions to contend with. Only Tuesday's ISM Services has the significance to move rates. But overseas we get a lot of PMI and GDP data that could have an impact on long bonds and rates. Today's Potential Rate Volatility: Average There's not a lot of domestic economic news coming out this week that has the ability to move the markets. Rates will be looking to the trade talks for direction.
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