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 under a little pressure today. The MBS market worsened by -39 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
These are the three things that have the greatest ability to impact rates this week. 1) Geopolitical, 2) Inflation and 3) Jobs.

1) Geopolitical: While geopolitical risk/concern over an ever-expanding campaign in Iran is real, the main focus in the markets is oil prices. We started last week with WTI Crude at $71 and ended the week in the high 80's. Now, this week start off in triple digits. The higher/longer scenario versus the higher/shorter time period scenario is what the bond market will focus on the most.

2) Inflation: We get two key inflationary reads this week with CPI and PCE. PCE wont hit until Friday though and the bond market will focus on CORE PCE YOY.

3) Jobs: We will get the delayed JOLTS report along with our weekly dose of Initial Claims.

Treasury Auctions this week: VERY important 30Y auction this week.

03/10 3YR note
03/11 10YR note
03/12 30YR bond

This Week's Potential Volatility: HIGH
This morning markets continue to be under pressure. Volatility has started at moderate to high levels and could easily become high 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.