Existing home sales rise to 17-month high

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Published Date 9/19/2019

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 caused rates or fees to move sideways for the day. The rates experienced high volatility yesterday.

Today's Rate Forecast: Neutral

Housing: August Existing Home Sales were stronger than expected with an annualized sales pace of 5.49M units vs. expectations of 5.37M. The median sales price rose by 4.7% on a YOY basis and is now $278,000. Housing inventory at the end of August decreased to 1.86 million, down from 1.90 million existing-homes available for sale in July, and marking a 2.6% decrease from 1.91 million one year ago. Unsold inventory is at a 4.1-month supply at the current sales pace, down from 4.2 months in July and from the 4.3-month figure recorded in August 2018. Properties typically remained on the market for 31 days in August, up from 29 days in July and in August of 2018. Forty-nine percent of homes sold in August were on the market for less than a month.

Jobs: Initial Weekly Jobless Claims were lower than expected (208K vs. est of 213K). The more closely watched 4-week moving average ticked up to 213K.

Manufacturing: The September Philly Fed Manufacturing Survey was better than expected (12.0 vs est of 11.0).

Leading Indicators: August release matched expectations with a flat reading of 0.0%.

Central Bank: The Bank of Japan kept its key interest rate at -0.1%, and The Bank of England kept its key interest rate at 0.75%.

Fed: The Federal Reserve Bank of New York once again had to have a Repo this morning to transform Treasuries and MBS into short term cash for major financial institutions and once again, it was over subscribed which means that there were more people wanting to "cash in" than there was cash awarded.

Today's Potential Rate Volatility: Low

Crazy day for rate markets yesterday even though rates ended the day unchanged. Look for volatility to be sucked out of the rate market today. As usual, anything unexpected on the geopolitical front can spike interest rate volatility.

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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