Rates flat as consumer sentiment falls sharply

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Published Date 1/18/2019

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 -13 bps yesterday. This may've been enough to worsen mortgage rates or fees. The market experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Housing: Housing Starts and Building Permits will not be released today due to the government shutdown.

Industrial Production: The December data just edged out expectations with a 0.3% vs 0.2% reading. Capacity Utilization hit 78.7% vs est of 78.5%.

Consumer Sentiment: The Preliminary University of Michigan's Consumer Sentiment Index was much lower than expected with a 90.7 vs 97.0 reading which is the lowest since October 2016. But this is just a preliminary reading and will be revised.

Fed: NY Fed President John Williams (voting member and the number 3 person at the Fed) said “If growth continues to come in well above sustainable levels, somewhat higher interest rates may well be called for at some point. However, if conditions turn out to be less robust, then I will adjust my policy views accordingly.” As well as “The approach we need is one of prudence, patience, and good judgment - the motto of ‘data dependence’ is more relevant than ever.”

Today's Potential Rate Volatility: Average

Rates are headed into a slightly higher channel. We expect rates to move sideways through today heading into the long holiday weekend. Of course, something unexpected on trade could increase 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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