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 +1 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility last week.

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

    1) Inflation: We will get key inflationary readings this week with both CPI and PPI. Expectations are for the MOM readings to rise again with the YOY numbers moving lower.

    2) Central Banks: We will hear from the Bank of England which is expected to raise their key interest rate by 25 basis points.

    3) Treasury Sales: We will focus primarily on Thursday's 30 year bond auction. Here is the schedule:

    05/09 3 year note
    05/10 10 year note
    05/11 30 year bond

    This Week's Potential Volatility: HIGH
    This morning markets have had a slight negative trend. Volatility has started high and will spike throughout the week on economic data.

    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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