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 worsened by -66 bps last week. This was 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) Jobs, 2) Inflation and 3) Grab Bag.

1) Jobs: We have a ton of wage and job related data all week culminating in Big Jobs Friday with the NFP, Unemployment Rate and Average Hourly Earnings. The Bond market will be very sensitive (but skeptical) of stronger than expected jobs data on Friday and will rally on weaker than expected data.

2) Inflation: We will get the Fed's key measure of inflation on Thursday with Core PCE. The weaker the number is, the better it will be for pricing. However, if this is higher than expected, it will drive pricing the wrong way.

3) Grab bag: We have an important interest rate decision out of the Bank of Japan, a first peek at the 3rd QTR GDP and Geopolitical.

This Week's Potential Volatility: HIGH
This morning markets got a small boost on oil prices but are now back to sideways trading. Volatility has started at moderate levels but will increase 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.