European Central Bank increases volatility with promises of further rate hikes

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Published Date 2/2/2023

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: Lower

Mortgage rates are leaning lower today. The MBS market improved by +21 bps yesterday. This may have been enough to decrease mortgage rates or fees. The market experienced high volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: The January Challenger Job Cuts Report almost tripled from December, 102,943 vs. 43,651. Initial Weekly Jobless Claims were lower than expected, 183K vs. est. of 200K. The more closely watched 4 week moving average dropped to 191,750. Continuing Claims were 1.655M vs. est. of 1.677M

Manufacturing: 4th QTR Non Farm Productivity was very good... rising at double the rate of the 3rd QTR (3% vs. 1.4%). Unit Labor Costs dropped from 2.0% in the 3rd QTR down to only 1.1% in the 4th QTR. December Factory Orders flipped from -1.9% in Nov to +1.8% in Dec but that was lower than the est. of 2.3%.

Central Banks: The Bank of England increased their rate by 50BPS by a vote of 7-2. They also signaled that they may be done for awhile, depending on the future data. But while the ECB also raised by 50BPS, their message was much different as they said that they will raise another 50BPS at the next meeting as well.

Today's Potential Rate Volatility: High

This morning markets are leaning positive. Volatility is high as markets digest jobs data.

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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All loans are subject to credit approval. Interest rates are subject to change daily and without notice. Current interest rates shown our indicative of market conditions and individual qualifications and will vary upon your lock-in period, occupancy, loan type, credit score, purpose and loan to value and lending source.