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Weekly Mortgage Market Overview






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.


Mortgage rates are trending slightly higher this morning.  Last week the MBS market worsened by -2bps.  This was not enough to worsen mortgage rates or fees. While the net change in mortgage rates was very slight for the week as a whole; there was a fair amount of movement of mortgage rates throughout the week.


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

1) Fed: The Federal Reserve Open Market Committee starts two days of meetings on Tuesday that will culminate with their interest rate decision and policy statement. This meeting doesn’t have a live press conference with Janet Yellen nor the release of their “dot plot chart.” Overall, the FOMC Governors and District Presidents have been somewhat “hawkish” as collectively they’re telling the markets that two more rate hikes AND a tapering of MBS purchases in the 4th Qtr are what they expect unless the economy tanks between now and the end of the year. But the market is not buying any of it with a zero percent chance of a rate hike priced in for this week’s meeting and only a 50/50 shot of a hike at June’s meeting.

2) Jobs: We get a bunch of wage and labor-related data this week which include Personal Income, ADP Private Payrolls, Challenger Job Cuts, Unit Labor Costs and some internals from ISM data. But its Big Jobs Friday that will wag the dog’s tail. Of interest to the marketplace, is not so much this month’s Non-Farm Payroll (NFP) reading but more so the revision to last month’s 98K reading. The biggest focus will be on wages with the monthly change in average hourly wages.

3) Geopolitical: This category continues to provide the most support for pricing. Domestically, a government shutdown was averted on Friday with a last minute stop-gap measure that was supposed to last a week. Now we have an agreement on a $1T spending bill that will keep our Government open until October 1. It’s once again not based upon a comprehensive budget and reform but rather, arm twisting and an extension based on political expediency and not fundamentals. Domestically, we may see the Republicans make another run at health care reform.

French elections are fast approaching as May 7th is right around the corner and North Korea says it will continue to conduct Atomic tests.


This is a fairly big week and a lot of opportunity for volatility, both economic and geopolitical. We’ll be paying close attention to Friday’s jobs numbers which have the greatest potential for volatility.


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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