Three things that can move mortgage rates this week

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Published Date 4/9/2018

This Week'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 trending sideways this morning. Last week the MBS market worsened by -4bps. This wasn't enough to move rates higher last week. Mortgage rate volatility has remained very stable while stocks have shown a great deal of volatility.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to move rates this week: 1) Geopolitical, 2) Fed and 3) Inflation.

1) Geopolitical: The bond market will continue to give the majority of its focus on trade talks between China and the U.S. as well as "tweets" over the progress of those talks. Don't forget about NAFTA as the deadline is fast approaching. The White House is also pushing to make some of the tax cuts permanent.

2) Fed: We will get the Minutes from the last FOMC meeting where they raised their key interest rate on Wednesday. Here is their schedule for this week:

04/10 - Robert Kaplan
04/11 - FOMC Minutes
04/12 - Neel Kashkari
04/13 - Eric Rosengren, James Bullard

3) Inflation: We get a couple of key reports this week with Wednesday's CPI getting the most attention of bond traders. We will also get PPI and Import Prices this week.

Debt Dump: The Treasury will be dumping more debt onto the marketplace this week:

04/10 3 year note
04/11 10 year note
04/12 30 year bond

This Week's Potential Volatility: Average

Mortgage rates are likely to trade in the same basic channel this week with relatively low volatility. Rates will primarily focus on tariff talks with China and comments from the People's Bank of China.

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.

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