Rates tick higher as wholesale inflation eases

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Published Date 5/9/2018

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: Higher

Mortgage rates are moving slightly higher so far today. The MBS market worsened by -15 bps yesterday. This was enough to worsen mortgage rates or fees. Rates experienced moderate volatility yesterday.

Today's Rate Forecast: Higher

Housing: Weekly Mortgage Applications fell by -0.4%, once again led by a drop in refinances (-1.0%). Purchase applications were flat at -0.2%.

Inflation: April Producer Price Index was very close to market expectations. The closely watched core (ex-food and energy) increased by 0.2% on a MOM basis which matched forecasts and increased by 2.3% vs 2.4% on a YOY basis.

Treasury Auction: Today we have our 10-year note auction.

Geopolitical: While the markets are trying to digest the long-game with dealing with Iran, the focus is back on North Korea. There's now an official date, time and location for a meeting with President Trump and Yun and our new Secretary of State is on his way back to the U.S. with three U.S. citizens that have been hostages of N.K.

Fed: Today we hear from Raphael Bostic at 1:45

Japan: Leading Economic Index 105.0 vs est 105.2.

Canada: Building Permits 3.1% vs est of 2.0%.

Today's Potential Rate Volatility: High

Mortgage rates are likely to push higher with a bit of increased volatility today. Now that President Trump has announced the withdrawal from the Iran deal, some uncertainty has been lifted from the markets. In addition, the de-escalation of the New Korea tensions has certainly helped the markets relative to a few short weeks ago.

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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