Home Mortgage Alliance Corporation (HMAC)

Higher than expected Employment Cost Index raises inflation concerns

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Published Date 4/30/2024

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 under pressure today. The MBS market improved by +1 bps yesterday. This was not enough to decrease mortgage rates or fees. The market experienced low volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: The 1st QTR Employment Cost Index was higher than expected, up 1.2% versus estimates of 1.0%.

Housing: We got some very strong price improvements this morning with the Case Shiller metro city index showing a 7.3% YOY price gain versus estimates of 6.7% and the FHFA Housing Price Index (a much larger data set) showing a MOM gain of 1.2% versus estimates of 0.1%.

Manufacturing: The April Chicago PMI was one of the worst ever recorded, showing massive contraction with a reading of 37.9 versus estimates of 44.9.

Consumer Confidence: There was none. Consumer Confidence absolutely crumbled, falling to 97.0 versus estimates of 104.0. The prior month was revised lower from 104.7 to 103.10.

Today's Potential Rate Volatility: Neutral

This morning markets are under pressure. Volatility has started at moderate levels.

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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