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 improved by +9bps. This was not enough to move rates lower last week. There was a good deal of mortgage rate volatility last week.

    This Week's Rate Forecast: NEUTRAL
    Three Things: These are the three areas that have the greatest ability to impact mortgage rates. 1) Jobs 2) Trade Wars and 3) The Fed.

    1) Jobs:
    We have no less than 12 different economic releases that address the labor market (jobs, wages, etc). Friday's employment situation will get the most weight with bond traders giving the YOY average hourly earnings the most attention. The estimates call for a 2.8% to 3.0% range, anything above 2.9% will be negative for mortgage rates.

    2) Trade Wars:
    NAFTA has been replaced with a last-minute agreement between Mexico, Canada, and the U.S. called USMCA. This agreement must still be approved by Congress though. The spotlight continues to be on the China vs. U.S. Trade War.

    3) The Fed:
    After last week's Fed meeting, the blackout period of Fed Speeches is over, and we will hear from a lot of FOMC members this week:

    • 10/01/18 Raphael Bostic, Neel Kashkari and Eric Rosengren
    • 10/02/18 Fed Chair Jerome Powell, Randal Quarles
    • 10/03/18 Charles Evans, Tom Barkin, Patrick Harker, Loretta Mester

    This Week's Potential Volatility: AVERAGE
    Mortgage rates are likely to move sideways in this new channel through Thursday. Friday, with the jobs data, we could see some rate volatility if the markets are surprised.



    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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