This Week’s Mortgage Rate Summary

Conventional overnment (FHA and VA) lenders set their rates based on the pricing of Mortgageand G-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.

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +50bps.  This was enough to move rates lower last week. We saw high rate volatility throughout the week.

Three Things: These are the three things that have the greatest ability to impact mortgage rates this week. 1) Geopolitical, 2) Trade and 3) Inflation.

1) Geopolitical: Brexit continues to take center stage as Prime Minister Theresa May’s cabinet is in full revolt. In a last-ditch effort to get the very unpopular deal pushed through before the deadline, May is offering to resign IF they pass her deal. This deal could be extended to May 22nd or April 12th depending on how some votes go. The markets are also concerned about the military escalation in Israel.

2) Trade: Trade Representative Lighthizer and Treasury Secretary Mnuchin are visiting China this week. With the Mueller investigation over, it’s believed that trade talks may take a step forward now that China has confidence in leadership in the U.S.

3) Inflation: We will get the Fed’s key inflation measure on Friday with the PCE report. The markets are expecting the Core YOY number to remain below 2.0%.

Treasury Auctions This Week:

03/26 2 year note

03/27 5 year note

03/28 7 year note

The Fed This Week:

03/25 Charles Evans, Patrick Harker

03/26 Patrick Harker, Eric Rosengren

03/27 Esther George

03/28 Raphael Bostic, John Williams, James Bullard

03/29 John Williams

After mortgage rates had a great run last week, we’re looking for a calmer day today and throughout the week. Rates are at a critical juncture. We’ll be paying close attention to whether we can push lower, we move sideways or rates start to drift higher.

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.