Three things that can impact rates this week

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Published Date 11/28/2022

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 improved by +48 bps last week. This was enough to decrease mortgage rates or fees. The market experienced moderate 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) Inflation, 2) Jobs and 3) The Fed.

1) Inflation: We will get the Fed's preferred key measure of inflation (Core PCE) on Thursday. Expectations are that it will continue to "5 handle" in the 5.0 to 5.1% range. The headline PCE is expected to remain at 6.2%

2) Jobs: We get a ton of job and wage related data all throughout the week with JOLTS, ADP, Initial Claims and Challenger Job Cuts. Then we get into Big Jobs Friday with Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings, U6 Underemployment and the Labor Force Participation Rate.

3) The Fed: We have a pivotal week from the Fed. Last week, it is clear that market sentiment shifted to expecting the Fed to move to a slower pace of rate hikes and at a smaller scale per meeting after digesting several statements from key Fed members. This week we have the Beige Book which is released exactly 2 weeks from the next FOMC meeting/decision. We will also hear from Fed Chair Powell and many other speakers prior to the media blackout period that starts on Monday leading up to their meeting.

This week's Potential Rate Volatility: High

This morning markets are stable. Volatility has started low but will spike on key economic data this 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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