Three things that could impact rates this week

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Published Date 12/11/2023

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 under moderate pressure today. The MBS market worsened by -17 bps last week. This was not enough to increase 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) Central Banks and 3) Inflation.

1) The Fed: The much anticipated FOMC meeting is this Wednesday. Currently, the markets are not pricing in any interest rate change nor a change in policy. The significance of this meeting is the release of their Economic Projections which is used to create the famous "dot plot" chart. While the Fed has been steadfast in communicating that they would remain at their current rate through 2024, the bond market is pricing in a series of rate cuts in 2024 and will be paying close attention to the Fed's dot plot chart to see if the FOMC starts to show lower rates in 2024.

2) Central Banks: We get key interest rate decisions from the ECB, Bank of England and the Swiss National Bank this week.

3) Inflation: We get key inflationary readings this week with CPI and PPI. CPI is expected to be mild while PPI is expected to show deflation.

Treasury Auction: We some very important auctions this week.

12/11 3 year and 10 year notes.

12/12 30 year bond.

Today's Potential Rate Volatility: High

This morning markets are under mild pressure as money gets back to work. Volatility has started high and will likely remain high with FOMC and inflation data later in the week.

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.