Ryan's Rate Commentary



  • 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: HIGHER
    Mortgage rates are trending slightly higher this morning. Last week the MBS market worsened by -95 bps. This was enough to worsen mortgage rates or fees. There was a good deal of rate volatility through the week.


    This Week's Rate Forecast: HIGHER
    Three Things: These are the three areas that have the greatest ability to impact rate markets this week: 1) Geopolitical, 2) Coronavirus, and 3) Jobs.

    1) The Fed: We have a busy week for Fed Speak with the release of the Beige Book and a speech by Fed Chair Powel. The bond market is acutely focused on any further discussion/direction on "taper talk" for the reduction in bond purchases by the Fed. Here is this week's schedule:

    • 01/11 Bostic, Kaplan
    • 01/12 Bostic, Brainard, Kaplan, Mester and George
    • 01/13 Beige Book, Bullard, Brainard, Harker, and Clarida
    • 01/14 Powell, Bostic and Kaplan

    2) Domestic: We have a big week for Economic Data. The releases that will get the most attention from bond traders are: CPI, Initial Weekly Jobless Claims, and Retail Sales.

    3) Stimulus: Now that much of the geopolitical uncertainty has been removed from bond prices, bond traders are focused on the timing and size of the next round of stimulus out of Congress which may include an additional round of direct checks to consumers.

    Treasury Dump: We have a big week for dumping our debt into the marketplace, with Wednesday's 30 year Treasury bond auction being the most important for our pricing.

    • 01/11 3 year note
    • 01/12 10 year note
    • 01/13 30 year bond

    This Week's Potential Volatility: HIGH
    For the first time in a long time, geopolitical events will not likely have an effect on rate markets. Rate markets will pay very close attention to the Fed and their view on tapering. There'll be a lot of focus on additional stimulus talks as well.



    Bottom Line:
    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.

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