Three things that could impact rates this week

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Published Date 5/13/2024

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 today. The MBS market worsened by -4 bps last week. This was not enough to increase mortgage rates or fees. The market experienced moderate volatility last week.

This week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Retail Sales and 3) The Fed.

1) Inflation: We will get both PPI and CPI this week with CPI getting more weight among bond traders. However, its really about which data set has the biggest deviation from market expectations. CPI is expected to increase on a MOM basis, the larger the increase - the worse it will be for rates. However, if we get a miss to the downside - MBS will rally.

2) Retail Sales: We get Retail Sales on Wednesday. Last week's Consumer Credit Report showed a much smaller than expected increase in revolving debt, however it was at the highest debt level carried by consumers ever.

3) The Fed: Here is this week's schedule:

05/13 Mester

05/15 Kashkari

05/16 Harker, Mester, Bostic

This week's Potential Rate Volatility: High

This morning markets are moving sideways as markets wait for inflation data. Volatility has started low but will increase with the weeks inflation reports.

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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