Published Date 10/13/2020
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.
Mortgage rates are trending sideways this morning on a good deal of volatility. Last week the MBS market worsened by -21bps. This was enough to move rates or fees slightly higher. We saw elevated rate volatility through much of the week.
Three Things: These are the three areas that can move rates this week: 1) Stimulus, 2) Coronavirus, and 3) Domestic.
1) Stimulus: We saw some severe movements higher and lower last week in MBS intraday pricing as a direct result of tweets, speeches, and interviews regarding the next round of stimulus. Any movement towards an agreement will continue to be negative for rates, and continued stalemates will be positive for rates.
2) Coronavirus: Our nation's daily cases up over 12% from last week and has a 7 day moving average of 49,542. Thirty-two states are seeing surges/increases in their 7-day averages. This provides significant headwinds to small businesses, which are the backbone of our economy. This trajectory will continue to provide support for long bond prices this week.
3) Domestic: We get some inflationary news with CPI and PPI, but bond traders' main focus will be the high-frequency Initial Jobless Claims and Friday's Retail Sales data. However, the Amazon Prime sales this week will probably provide more of an insight into the U.S. Consumer.
We could see another week of elevated rate volatility. The are several events that can spike rate volatility this week, including a stimulus deal. An agreement on stimulus will cause volatility to spike, and rates will likely tick higher.
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: TBWSAll information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
Guardian Mortgage, a division of Sunflower Bank, N.A.
NMLS: NMLS# 220741
Guardian Mortgage
16430 N Scottsdale Rd #120, Scottsdale AZ
Company NMLS: Dean Wegner
Office: 602-432-6388
Cell: 480-286-3303
Email: deanwegner@gmc-inc.com
Web: https://www.guardianmortgageonline.com/loanoriginators/Dean-Wegner
NMLS: NMLS# 220741
Cell: 480-286-3303
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