Rates moving slightly lower on Brexit uncertainty

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Published Date 11/15/2018

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: Lower

Mortgage rates are moving slightly lower so far today.  The MBS market improved by +15 bps yesterday. This probably was enough to improve mortgage rates or fees.   The rates experienced low volatility yesterday.

Today's Rate Forecast: Neutral

Retail Sales: The October data was much stronger than expected. The headline retail sales number came in at 0.8% vs est of 0.5% and Ex-Autos, they were 0.7% vs est of 0.5%.

Genco Olive Oil: Import prices YOY remained at a 3.5% pace

Manufacturing: The NY Fed's Empire Manufacturing survey was better than expected with a 23.3 vs 20.0 expectation. But the Philly Fed's Manufacturing survey was lighter than expected (12.9 vs est of 20.0).

Fed: Last night Fed Chair Jerome Powell said that he is content with the current state of the economy, and was quick to take credit for the ongoing expansion: "I'm very happy about the state of the economy. Our policy is one reason the economy's in such a good place right now." He also confirmed that the tightening process will go on at a "gradual pace", saying that the Fed is avoiding "hiking too slowly or too fast" and is taking "both sides seriously so is gradually raising rates."

Trade War: According to Reuters, China sent a written response to Trump's demands on intellectual property theft, industrial subsidies, Chinese entry barriers to American businesses and the U.S. trade deficit with China, although it was unclear if the response contained concessions that would satisfy Trump’s demands for change.

Brexit: Hard or Soft exit? Yes. The soap opera is fantastic to watch as committee leader after committee leader has resigned and now there is a call for a vote of "no confidence" which could end PM May's leadership as well.....however she says she has the support needed to pass her version.

Great Britain: Retail Sales YOY 2.2% vs est of 3.0%

Today's Potential Rate Volatility: Average

Mortgage rates are moving slightly lower this morning on the Brexit news. The uncertainty is helping to push rates marginally lower in the short term. Rates are still in a very tight channel, but as we get closer to the extreme, we could see increased volatility.

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.

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Mortgage Solutions Group, PLLC

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