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 moving higher today. The MBS market improved by +9 bps last week. This was not enough to improve mortgage rates or fees. The market experienced high volatility last week.

    This Week's Rate Forecast: HIGHER
    Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Covid, 2) Jobs and 3) The Fed.

    1) Covid: We saw a huge (+74BPS) gain on Friday due to news of the new Omicron variant. Besides the obvious health concerns, the markets are focused on the potential for renewed lockdowns, travel restrictions and overseas factory closures which could provide a very strong headwind to our economic recovery.

    2) Jobs: We have a large plate of job and wage related data to digest this week which will culminate in Big Jobs Friday with the Unemployment Rate, Non Farm Payrolls and most importantly, Average Hourly Earnings.

    3) The Fed: We will hear from several major Central Bankers this week. We hear from our own Fed Chair Powell on Tuesday and get our Beige Book on Wednesday. The bond market will continue to struggle with trying to handicap what the Fed may or may not do to the pace of the Taper at the December FOMC meeting.

    This Week's Potential Volatility: HIGH
    This morning we're seeing a step back from Friday's panic buying. Volatility is high as markets keep an eye out for news on Omicron.

    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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