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 +31 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
These are the three areas that have the greatest ability to impact rates this week. 1) Geopolitical, 2) Inflation and 3) The Fed.

1) Geopolitical: We saw huge upward swings last week due to geopolitical events. The long bond market will continue to be very sensitive to this area.

2) Inflation: We will get CPI on Tuesday and PPI twice (two months worth) on Wednesday.

3) The Fed: At the end of this week, the Fed will enter their media blackout period leading into the January FOMC Meeting. We will hear from a ton of speakers this week and get the Fed's Beige Book.

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

01/12 3YR Note
01/12 10YR Note
01/13 30YR Bond

This Week's Potential Volatility: HIGH
This morning markets are moving sideways. Volatility has started at moderate to high levels and could easily become high later in the 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.