Mortgage rates settle heading into the weekend

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Published Date 9/22/2017

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 so far today. The MBS market worsened by -2 bps yesterday. This wasn't enough to worsen mortgage rates or fees. The market experienced low volatility yesterday.

Today's Rate Forecast: Neutral

Fed: S.F. Fed President John Williams said "Obviously we've talked about this endlessly. We've announced it, and the markets have totally taken this in stride. But it's still an open question as we actually implement this next month and over the next several years, how will markets react? We'll obviously be following that very carefully." and "I don't anticipate any sudden or large effects on rates or spreads or things like that as we normalize."

Kansas Fed President Esther George will speak at 9:30.
Atlanta Fed will release their Business Inflation Expectations at 10:00.
Dallas Fed President Robert Kaplan will speak at 1:30.

Geopolitical:

NAFTA: The third round of negotiations will start this Saturday.

North Korea: Taiwan announced that they will honor current contracts in place until December for textile imports but will stop after that point. They will also stop delivery of all fossil fuels to N.K. Meanwhile, Kim Jong-un has announced that N.K. may test a Hydrogen bomb in the Pacific Ocean.

Germany: Their elections will be this weekend. Merkel is expected to remain but the far-right party will get a seat at the table which could drive Germany's policies on immigration to be more protectionary.

Brexit: PM Theresa May will speak in Florence today

Eurozone: Both Services and Manufacturing were better than expected with the Markit Manufacturing PMI hitting 58.2 vs est of 57.1 and Services hitting 55.6 vs est of 54.7. Both are very strong readings considering anything above 50.0 is expansionary.

Canada: Headline Retail Sales were 4x higher than expectations (0.4% vs est of 0.1%) but when you strip out autos, it half of market expectations (0.2% vs est of 0.4%). Inflation remains tame with CPI YOY at 1.4%.

Today's Potential Rate Volatility: Average

After a week that could've been very volatile with the Fed meeting and wasn't, we have a day where rates should move sideways with low volatility. No economic news due out heading into the weekend. Short of an unexpected geopolitical event, rates should move sideways.

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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