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: NEUTRAL
    Mortgage rates are trending sideways this morning. Last week the MBS market worsened by -37bps. This was enough to move rates higher last week. There was moderate rate volatility last week.

    This Week's Rate Forecast: NEUTRAL
    Three Things: Tariffs/Trade war is the only thing that has the ability to move rates. We do have one Central Bank meeting (Bank of Japan), but the markets are not expecting anything out of them. The housing data, while important won't play a role in rates.

    Trade Wars:
    After discussions, this weekend with Chinese trade representatives didn't produce any notable results, President Trump has said he'll move forward with an announcement (perhaps as soon as Monday) with $200B in newly enforced tariffs. Please note that these tariffs have been "dangled" out there for the past three weeks and this is not a surprise. And actually, the final version of these tariffs are supposed to be a lower rate than were originally proposed.
    Housing Data:
    While these reports do not impact mortgage rates, they will give us a good "report card" on how the housing market is doing. This week, we get the NAHB Index, Building Permits and Housing Starts and the most important housing report...Existing Home Sales on Thursday.

    This Week's Potential Volatility: AVERAGE
    While there isn't any planned economic data due for release that has the ability to move rates, we still could see some movement. China has vowed to retaliate if the US imposes more tariffs. As noted above, if that happens, we could see some shifts in rates and an increase in 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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