Published Date 8/8/2022
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.
Mortgage rates are moving sideways today. The MBS market worsened by -72 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.
Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Treasury Sales and 3) The Fed
1) Inflation Nation: We get key readings on Inflation this week with Wednesday's CPI and Thursday's PPI. The market will be focused on the MOM change more so than the YOY change. The YOY change is expected to move lower but that is not reflection of current trend. The lower this MOM change is, the better it will be for rates, the higher the rate of change is....the worse it will be for rates.
2) Treasury Sales: We have two key auctions this week with Thursday's 30 year Treasury bond auction taking center stage as the most important of the week.
08/09 3 year note
08/10 10 year note
08/11 30 year bond
3) The Fed: Last week, we saw some big moves in pricing in response to comments made by several Fed Presidents. The bond market will continue to put a lot of weight on any commentary/speeches from Federal Reserve representatives since they are no longer providing any forward guidance as part of their policy statements. We will hear from Evans and Kashkari and probably a few others via interviews. We will also pay close attention to the Atlanta Fed's Inflation Expectations and the updated Fed Balance Sheet.
This morning markets are mostly moving sideways. Volatility has started low this week but any major news event could easily shift volatility higher.
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: TBWSAll 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.
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Sage Wholesale
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Office: 949-681-5253
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Email: Info@SageTPO.com
NMLS: 3304
Cell: 818-793-6650
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