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 getting a little support today. The MBS market improved by +59 bps last week. This was enough to decrease mortgage rates or fees. The market experienced high volatility yesterday.

This Week's Rate Forecast: NEUTRAL
These are the three things that have the greatest ability to impact rates this week. 1) The Fed, 2) Inflation and 3) Geopolitical

1) The Fed: While the Fed is on a media blackout leading into next week's FOMC meeting, there is still plenty of speculation (and drama) for the markets. Right now, the bond market is fully on board with at least a 25 basis point cut, however we will see fluctuations in rates based up on the ebb and flow of speculations of a 50 basis point cut.

2) Inflation: We will get both the Producer Price Index and the Consumer Price Index this week, with CPI getting the most attention. The bond market will be focusing on whether Tariffs are pushing inflation higher. And if so, how could it impact the Fed's decision on 25 basis point or 50 basis point cut at their next meeting.

3) Geopolitical: The PM of Japan has resigned, and it is expected that the PM of France will be out as well. Tariffs are also still very much in the spotlight with legal action. There are also concerns over India and South Korea.

Central Banks:
We will get an important Interest Rate Decision and Policy Statement out of the European Central Bank on Thursday.

Treasury Auction:
We have three important auctions Tuesday, Wednesday and Thursday

This Week's Potential Volatility: HIGH
This morning markets have started with a little support. Volatility has started at moderate to low 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.