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 in 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: Higher
Mortgage rates are trending slightly higher so far today. Last week the MBS market improved by +54bps. This may have been enough to slightly improve rates or fees. We saw moderate rate volatility throughout the week.
This Week's Rate Forecast: Neutral
Three Things: These are the three areas that have the greatest ability to move rates this week. 1) Central Bank, 2) Coronavirus and 3) Domestic
1) Central Bank: We will have a Bank of Canada meeting as well as hear from the IMF and a rare NBS meeting out of China. Our own Federal Reserve will reduce the amount of MBS purchases again (they have reduced the daily purchase amount each of the past three weeks). We will also get their Beige Book.
2) Coronavirus: Of course, the primary driving force behind all of the emergency governmental, Treasury and Central Bank auctions is the COVID-19 pandemic and its monumental impact on the global economy. Here are the headlines to start our week:
- U.S. Cases now more than 560K, deaths more than 22,110.
- Global cases now more than 1.86M and deaths more than 115K.
- Amazon to hire yet another round of workers, this time 75K (had previously announced 100K).
- China and Russia see a significant spike in cases.
- U.S. considering restrictions on WHO funding.
3) Domestic: While the economic data over the past couple of weeks has primarily been from February, the economic data this week will mostly be from March, which is much worse than February as it is from a period where the economy started to feel the impact from the COVID-19. Of note is retail sales, but getting the most attention is the weekly dose of Initial Jobless Claims.
This Week's Potential Volatility: Average
Rate volatility will once again is almost entirely dependent on coronavirus updates. The Fed and Congress are pumping a ton of money into the system in a variety of different ways; the introduction and evolution of these programs will continue to play a significant role in the rate markets.
If you are looking for the risks and benefits of locking your interest rate today or floating your loan rate, contact your mortgage professional to discuss it with them.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events that may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.