The Bank of England remained steady on their key interest rate

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Published Date 2/1/2024

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 moving sideways today. The MBS market improved by +20 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 showed a very large spike in corporate announced layoffs from 35K in December to 82K in January. Initial Weekly Jobless Claims were a little higher than expected, 224K versus estimates of 212K. The more closely watched 4 week moving average ticked up to 207K which is still very low. Continuing Claims were 1.898M versus estimates of 1.840M.

Manufacturing: The preliminary 4th QTR Non Farm Productivity rate was much better than expected, up 3.2% versus estimates of 2.5%. Unit Labor Costs rose at a very tame 0.5% versus estimates of 1.7%. The benchmark ISM Manufacturing PMI remained in contractionary territory with a reading of 49.1 versus estimates of 47.0. Prices Paid were 52.9 versus 46.9 and the Employment Index was 47.1.

Construction: December Construction Spending 0.9% versus estimates of 0.5%.

Central Banks: The Bank of England kept their key interest rate at 5.25%. They had one vote to lower rates and 2 votes to increase rates and the rest of the votes were to leave it alone.

Today's Potential Rate Volatility: Neutral

This morning markets are mostly moving sideways. Volatility has started low.

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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