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 sideways today. The MBS market worsened by -32 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) Central Banks, 2) Retail Sales and 3) Geopolitical.

1) Central Banks: We will get the ECB's Interest Rate Decision and Policy Statement on Thursday and the bond market will be sensitive to ECB President LaGarde's comments and forward guidance.

2) Retail Sales: Thursday's Retail Sales report will be the most important economic release of the week. It is expected to rise by 0.3% on the Headline Number but only by 0.1% on the Ex-Trans number. Consumer Credit last week was very weak so we will see.

3) Geopolitical: This is really about Oil as prices have leveled off and even gradually moved lower which if it continues will be a positive for rates.

This Week's Potential Volatility: NEUTRAL
This morning markets are moving within a narrow range. Volatility has started at low to moderate levels and will likely stay that way pending any big surpises.

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.