Ryan's Rate Commentary



  • How Rates Move:

    Conventional overnment (FHA and VA) lenders set their rates based on the pricing of Mortgageand G-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 trending higher this morning. Last week the MBS market worsened by -2bps. This caused rates to move sideways for the week. We saw relatively mild rate volatility throughout the week.

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

    1) Brexit:
    The European Union has scheduled an "emergency" Brexit meeting for April 10 as Great Britain has failed to pass anything by the March 31st deadline. While, Great Britain has voted to extend the deadline, that deadline cannot be unilaterally extended. Meanwhile, British Prime Minister Theresa May is attempting to hold yet another "indicative" vote on Tuesday, and the House of Commons is looking to plan another round of votes on Monday.

    2) Trade:
    Fresh off of last week's meetings in China, Chinese Vice Premier Liu He will be visiting Washington on Wednesday for further discussions. Also, on the NAFTA front, the deal that was reached with Mexico and Canada is still not final as it has not passed through our Congress. Canada is balking at some tariffs that are still in place (and were not part of the deal), and Mexico is concerned that the U.S. is going to completely close down the U.S. - Mexico border as a series of "caravans" with thousands of people are attempting to violate our borders.

    3) Jobs:
    There are several key domestic economic reports this week which include ISM Manufacturing and ISM Services, the later representing 2/3 of our economy. However, most of the attention will be on Friday's big jobs data dump. As far as Non-Farm Payrolls, we want to see just how much last month's reading of 20K will be revised. But MBS will react the most to the average hourly earnings on a Year-over-Year basis. It is expected to remain at the very lofty level of 3.4%.

    This Week's Potential Volatility: HIGH
    While rates are ticking higher today, we're still at very low levels. Rate markets will be paying close attention to wage growth on Friday. A good number could cause rates to tick higher on elevated volatility.



    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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