Markets calmer today despite mixed economic data

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Published Date 9/27/2022

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 worsened by -133 bps yesterday. This was enough to increase mortgage rates or fees. The market experienced high volatility yesterday.

Today's Rate Forecast: Neutral

Manufacturing: August headline Durable Goods Orders were better (less worse) than estimates (-0.2% vs. est. of -0.4%). Ex Transportation, it matched expectations at +0.2%. But Ex Defense it dropped by -0.9% vs. est. of +0.0%. The September Richmond Fed Manufacturing Index came in flat at 0 vs. est. of -1 and a large improvement over August's reading of -8

Housing: August New Home Sales were much stronger than expected, 685K vs. est. of 500K. However, the July MOM FHFA Housing Price Change showed a drop of -0.6% vs. est. of +0.7%. This is the first negative monthly price change since July 2020. Case Shiller YOY showed an annual gain of 16.1% which was a big drop from June's pace of 18.7%. This is the first drop in the Case Shiller HPI since 2012 and the contraction of -2.3% between July and August is largest deceleration in history.

Consumer Confidence: The Conference Board's September reading was much higher than expected hitting a very high 108.0 vs. est. of 104.3.

Treasury Sales: We have a 5 year Treasury note auction at 1 pm ET

The Fed: Today we hear from Charles Evans, James Bullard, Mary Daly

Today's Potential Rate Volatility: High

This morning markets are making a small recovery after yesterdays beating. Volatility remains high with dramatic moves within a narrow trading window.

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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