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Weekly Mortgage Market Overview
THREE THINGS THAT CAN IMPACT MORTGAGE RATES THIS WEEK
Published Date 4/10/2017
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 improved by +5 bps. This was not enough to improve mortgage rates or fees. Mortgage rates continued to trade in very narrow channel with relatively low volatility.
THIS WEEK’S RATE FORECAST: NEUTRAL
Three Things: These are the three things that could have the greatest impact on mortgage rates this week: 1) The Fed, 2) Geo-Political and 3) Domestic
1) The Fed: MBS traders are trying to get a better sense of the timing and mix of the Fed reducing the amount of their MBS purchases each week. To that end, we’ll focus on Janet Yellen’s speech today at 4:10 PM EST at the University of Michigan.
St. Louis Fed President James Bullard spoke in Australia and said that the Fed should not be in a rush to raise rates but instead, end their balance sheet reinvestment. Here is the Fed’s schedule this week:
- 04/10 James Bullard, Janet Yellen
- 04/11 Neel Kashkair
- 04/12 Atlanta Fed Business Inflation Expectations
- 04/13 Fed’s Balance Sheet.
2) Geo-Political: We have several key stories that we are tracking. France will have a round of voting to narrow the Presidential field. The more votes that Le Penn gets, the better it is for MBS as traders are concerned that her (and other right-wing contenders) would lead France to leave the EU (similar to the Brexit).
Syria and the U.S. will continue gain attention as tensions mount among Russia, Iran, Syria and the U.S.
Tensions with North Korea and trade negotiations with China will also get a lot of attention.
3) Domestic Flavor: Our most significant releases won’t hit until Friday, and the bond market is closed that day. Retail Sales, PPI and CPI will get the most attention from long bond traders.
Treasury auctions this week:
- 04/10 3 year note
- 04/11 10 year note
- 04/12 30 year bond (most important)
THIS WEEK’S POTENTIAL VOLATILITY: AVERAGE
Look for relatively low volatility this week from mortgage rates. The biggest economic news of the week will be released Friday when the bond market is closed. The Geopolitical situation is a bit of a wildcard and can have a significant effect on mortgage rates at any time.
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.
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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