Three things that could impact rates this week

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Published Date 5/1/2023

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: Neutral

Mortgage rates are moving sideways today. The MBS market improved by +11 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility last week.

Today's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Jobs and 3) Central Banks.

1) The Fed: On Wednesday we will get the Federal Open Market Committee's latest Interest Rate Decision and Policy Statement. The bond market has moved from expecting a "pause" in their tightening cycle to expecting a hike at this meeting. The focus will be on future expectations of hikes, pausing (and for how long) and eventually rate decreases depending on the expected timing of a slowdown or recession. We will also have a live presser with Fed Chair Powell after the meeting but this meeting will not have an updated Economic Projections (dot plot chart).

2) Jobs: This week we will get a ton of job and wage related data that culminates in Big Jobs Friday: ADP Payrolls, Challenger Job Cuts, Weekly Jobless Claims, Continuing Jobless Claims, Non Farm Payrolls, Average Hourly Earnings, Unemployment Rate and ISMs.

3) Central Banks: Our own Fed is not the only game in town. We have a few smaller CBs this week but the markets will focus on the European Central Bank's Interest Rate Decision and Policy Statement/Guidance this week.

This week's Potential Rate Volatility: High

This morning markets are mostly treading water. Volatility has started high and will likely stay high for FOMC and the Friday jobs report.

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

All 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.

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.