Markets await Fed decision

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Published Date 3/14/2017

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 slightly lower so far today. The MBS market worsened by -37 bps yesterday. This was enough to worsen mortgage rates or fees. The market experienced high volatility yesterday.

Today's Rate Forecast: Neutral

Inflation: This week, we get two key measures but neither are the Core PCE that the Fed uses as their target rate. Today, we got the front of the equation with the Producer Price Index. Tomorrow we get the back end of the equation with Consumer Prices. Today's PPI was hotter than expected with the headline MOM reading coming in three times higher (0.3% vs est of 0.1%). The YOY reading hit 2.2% vs est of 2.0%.

Fed: The much-anticipated March FOMC started today and will conclude Wednesday at 2:00 PM EST.

Oil: WTI Oil prices continue to fall after Saudi Arabia discloses higher output levels which has supply levels rising.

China (number 2 economy): Retail Sales were lighter than expected and were up only 9.5% lol. The market was expecting 10.5%.

Germany (number 4 economy): Consumer Prices matched market expectations with a YOY reading of 2.2%.

Eurozone: Industrial Production was much weaker than expected in January (0.9% vs est of 2.0%)

Today's Potential Rate Volatility: Average

Mortgage rates should continue to move sideways for the rest of the day. The market is on hold for tomorrow's Fed decision. While the rate hike is expected by most everyone, Janet Yellen's comments will be very important to the market and will likely cause mortgage 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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