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: NEUTRAL
    Mortgage rates are moving sideways today. The MBS market improved by +54 bps last week. This may have been enough to decrease mortgage rates or fees. The market experienced high volatility last week.

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

    1) Treasury Auction: We have yet another record breaking week in terms of the sheer amount of debt that we are dumping into the market place with $125B needing to be absorbed:

    05/07 3 YR Note $58B
    05/08 10 YR Note $42B
    05/09 30 YR Bond $25B

    2) Central Banks: We have a few Central Banks this week but the focus will be on the Bank of England on Thursday.

    3) The Fed: Last week, the FOMC Policy was "hawkish" but Powell was "dovish". This week's round of Fed Speak could give bond traders yet another perspective.

    05/06 Barkin and Williams
    05/07 Kashkari
    05/08 Jefferson, Collins, Cook
    05/09 Balance Sheet
    05/10 Bowman, Goolsbee, Barr

    This Week's Potential Volatility: NEUTRAL
    This morning markets are not seeing big movements. Volatility has started low but may increase later in the week on Fed comments.

    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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