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 getting some support today. The MBS market improved by +54 bps last week. This was enough to decrease mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: NEUTRAL
These are the three things that can have the greatest impact on rates this week. 1) Geopolitical, 2) Inflation and 3) Services.

1) Geopolitical: This category will continue to dominate long bond trades. On the radar is a possible truce, higher escalation, the Straight of Hormuz, oil prices, etc.

2) Inflation: We get a lot of inflation data this week with PCE and CPI. PCE will get more weight as the Fed's key measure of inflation, Core PCE will get on Thursday.

3) Services: The ISM Non Manufacturing PMI (services) kicks off our week. This represents 2/3 of our economic engine. ISM services was reported at 54 versus expectations of 55 while Prices paid rose from 63 to 70.7.

Treasury Auction: We have a big week for longer term Treasuries.

04/07 3 year note.
04/08 10 year note.
04/09 30 year bond.

This Week's Potential Volatility: HIGH
This morning markets continue to see some support on geopolitical concerns. Volatility has started at moderate levels but could become high at any time this week.

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.