Three things that could impact rates this week

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Published Date 5/6/2024

Today's Mortgage Rate Summary

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.

Rates Currently Trending: Neutral

Mortgage rates are moving sideways today. The MBS market improved by +54 bps last week. This may have been enough to decrease 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) Treasury Auction, 2) Central Banks and 3) The Fed.

1) Treasury Auction: We have yet another record breaking week in terms of the sheer amount of debt that we are dumping into the market place with $125B needing to be absorbed:

05/07 3 YR Note $58B

05/08 10 YR Note $42B

05/09 30 YR Bond $25B

2) Central Banks: We have a few Central Banks this week but the focus will be on the Bank of England on Thursday.

3) The Fed: Last week, the FOMC Policy was "hawkish" but Powell was "dovish". This week's round of Fed Speak could give bond traders yet another perspective.

05/06 Barkin and Williams

05/07 Kashkari

05/08 Jefferson, Collins, Cook

05/09 Balance Sheet

05/10 Bowman, Goolsbee, Barr

This week's Potential Rate Volatility: Neutral

This morning markets are not seeing big movements. Volatility has started low but may increase later in the week on Fed comments.

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.

Source: TBWS

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