Rates flat as producer prices move lower

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Published Date 9/12/2018

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: Neutral

Mortgage rates are moving sideways so far today. The MBS market worsened by -23 bps yesterday. This was enough to worsen mortgage rates or fees. The rates experienced moderate to high volatility yesterday.

Today's Rate Forecast: Neutral

Inflation: The August Producer Price Index (PPI) was much lighter than expected. The headline YOY PPI showed a 2.8% increase vs expectations of an increase of 3.2%. The Core (ex-food and energy) came in at 2.3% vs est of 2.7%.

Housing: Weekly Mortgage Applications fell by -1.8%. That was due to a drop of -6.0% in refinance applications; purchase applications increased by +1.0%.

Treasury Dump: Today we have our 10-year treasury note auction at 1 pm EST.

Fed: They will release their Beige Book which is compiled to use at their next Fed meeting. Also, Fed Governor Lael Brainard (voting member) will speak today.

Today's Potential Rate Volatility: Average

Mortgage rates ticked higher yesterday with a bit of volatility. We expect mortgage rates to move sideways today with moderate to low volatility ahead of tomorrow's consumer price index (CPI). The release of the CPI numbers could cause a bit of volatility if it is not in line with expectations.

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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