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 under pressure today. The MBS market improved by -20 bps last week. This was not enough to increase 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) Inflation, 2) The Fed and 3) Domestic News.

    1) Inflation: We get the Fed's preferred key measure of inflation, PCE on Friday. The bond market is expecting continued upward pressure on a MOM basis, particularly in the headline number which includes energy. But we are expecting some YOY declines due to the base effect comparison factor. Also of key importance is the personal savings rate which was absolutely crushed in the prior release.

    2) The Fed: This week we will hear from Fed Chair Powell on Thursday. Here is this week's schedule:

    09/26 Bowman
    09/28 Goolsbee, Cook, Barkin and Powell
    09/29 Williams

    3) ) Domestic News: PCE is the most important release of the week but we also have some other key reports. Consumer Confidence, Revised GDP and Chicago PMI will get a lot of attention from bond traders.

    Treasury Auctions: Here is this week's auction schedule.

    09/26 2 year note
    09/27 5 year note
    09/28 7 year note

    This Week's Potential Volatility: HIGH
    This morning markets started under heavy pressure. Volatility will be high 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.

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