Published Date 11/18/2019
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.
Mortgage rates are trending sideways this morning. Last week the MBS market improved by +21bps. This may've been enough to move rates or fees slightly lower last week. We saw moderate rate volatility through the week.
Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Trade Wars, 2) Central Bank and 3) Geopolitical
1) Trade Wars: Confirmation that talks between US and China on Saturday initially improved trade sentiment, but that looks like it has been dashed as news out of China is that they are frustrated that the US has not agreed to roll back tariffs. They're also concerned that President Trump will change his mind on the overall agreement.
2) Central Bank: We will get the Minutes from the Last FOMC meeting on Wednesday, but given Powell's Economic Testimony last week, there is likely not much probability that there is something in the Minutes that will cause a shift in pricing. Fed Chair Powell, President Trump, and Treasury Secretary Mnuchin met at the Whitehouse Monday. The European Central Bank's newly installed President, Christine Lagarde will give her first big speech this week since taking office. The People's Bank of China cut rates on seven-day reverse repurchase agreements by five basis points to 2.50% in its latest show of support for its economy.
3) Geopolitical: Brexit is front and center stage (literally) as Prime Minister Boris Johnson and Labour leader Jeremy Corbyn, will be on stage for a public Brexit Election Debate on the 19th. China's crackdown on Hong Kong protestors and its"reeducation" camps on mainland China also will be of concern to the markets.
Rate volatility through the week will be largely affected by the trade war news. Trade uncertainty is continuing to keep rates relatively low and in a tight range. There's not a lot of scheduled economic releases that will likely move rates out of its narrow channel.
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.
Source: TBWSAll information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
First
Priority Home Loans is a DBA of Anchor Funding, Inc. NMLS #236419 &
1626581. California
Bureau of Real Estate,
Real
Estate Broker Number 01276087. Loans made or arranged pursuant
to the
California Department of Business Oversight. California Finance Lenders Law
license number 603 L293.
NMLS: 220937
First Priority Home Loans
891 Kuhn Drive #204, Chula Vista CA
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Office: 619-323-2066
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