Three things that could impact rates this week

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Published Date 5/20/2024

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 +16 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility last week.

Today'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) Treasury Auction and 3) Geopolitical

1) The Fed: We have a huge amount of scheduled speeches this week. The bond market will be very keen to see if there is any change in tone after last week's round of inflation and Retail Sales data.

05/20 Bostic, Barr, Waller, Jefferson

05/21 Barkin, Waller, Williams, Bostic, Barr

05/22 FOMC Minutes, Atlanta Fed Business Inflation Expectations

05/23 Bostic

05/24 Williams

2) Treasury Auction: We have an important 20 year Treasury Bond auction on Wednesday that has a very strong correlation to MBS.

3) Geopolitical: With the lack of meaningful major domestic economic data this week, geopolitical issues such as the death of Iran's President, Israel/Hamas, etc will drive bond yields.

Today's Potential Rate Volatility: Neutral

This morning markets are not seeing significant movement. Volatility has started low but may increase 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.

Source: TBWS

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