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 -68 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) The Fed, 2) Central Banks and 3) Treasury Auction.

1) The Fed: On Wednesday we will get the latest FOMC Interest Rate Decision and Policy Statement. While there are no expectations of any rate changes at this meeting, the bond market will be very sensitive to changes in the policy statement as well as mentions of changes to the QT wind down process. But of more importance is the release of their updated Economic Projections from which the famous "dot plot" chart is created. The bond market will focus on the groupings of "dots" that move away from rate cuts/lower expected rates during certain periods compared to their last release. After all of that, we have a live presser with Fed Chair Powell.

2) Central Banks: Our Federal Reserve is not the only game in town this week. We also get key interest rate decisions from the Bank of England, the Reserve Bank of Australia and the Bank of Japan. The BofJ may actually raise their interest rate for the first time in forever from -0.10% to 0.0%.

3) Treasury Auction: We have an important 20 year Treasury bond auction on Wednesday at 1 pm ET.

This Week's Potential Volatility: HIGH
This morning markets are not seeing significant change. Volatility has started low but will increase later in the week on central banks decisions.

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.