TODAY’S MORTGAGE RATE SUMMARY

CONTINUED JOBLESS CLAIMS AT LOWEST LEVEL IN MORE THAN 28 YEARS

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 -25 bps yesterday. This was enough to worsen mortgage rates or fees.   The market experienced moderate volatility last yesterday.

TODAY’S RATE FORECAST: NEUTRAL

Inflation: The April Producer Price Index (PPI) was much higher than expected. The Headline MOM reading was more than double market expectations (0.5% vs est. of 0.2%) and is now at 2.5% on a YOY basis which is much higher than the consensus estimates of 2.2%. When you look at the Core (ex-food and energy), the MOM reading came in at 0.4% vs est. of 0.2% and YOY it was 1.9% vs est. of 1.7%. The YOY reading is the highest since January 2015.

Jobs: Initial Weekly Jobless Claims came in at 236K vs est. of 245K. This brings the more closely watched 4-week moving average down to 243,500 which is very low. Continuing Claims were also lower than expected (1.918M vs est. of 1.980M) which is the lowest level in over 28 Years.

Great Britain: The Bank of England kept their key interest rate at 0.25% and left the pace of their asset purchase program the same. The vote was 7-1 which was basically in line with market expectations with a few hedging for a 6-2 vote. During his live press conference, B of E President Carney said he has raised his inflation/growth expectations for the full year and that their current stimulus plan is adequate.

Eurozone: Their Unemployment Rate was unchanged at 9.6% and they had a tick up in inflation as their PPI YOY hit 3.5% vs est of 3.2%.

TODAY’S POTENTIAL RATE VOLATILITY: AVERAGE

Mortgage rate volatility is average again today. However, for the last four days we’ve seen mortgage rates inch up with very little volatility. We expect the same today, short of a big geopolitical event or an epic fail in the 30 yr. bond auction this afternoon.

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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