Rates flat as stock market continues to tumble

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Published Date 11/20/2018

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: Neutral

Mortgage rates are moving slightly higher so far today. The MBS market improved by +1 bps yesterday. This wasn't enough to improve mortgage rates or fees. The rates experienced low volatility yesterday.

Today's Rate Forecast: Neutral

Housing: New housing starts matched expectations (1.228M vs 1.230M) and building permits just edged out estimates (1.263M vs est of 1.260M). While both of these readings look relatively good...the problem is that the strength is in multi-family which is where you do not want it to be. For example, multi-family units jumped by 10.3 percent to a 363,000 rate, but single-family starts slipped by -1.8 percent to an 865,000 rate.

Stock Market: Last week the DJIA lost 576 points. Yesterday and so far this morning the decline adds up to 1500 points down in six+ sessions. Now the big boys (Goldman) are saying investors should push more money to cash. As for stocks, investors should tilt their portfolios toward defensive sectors including utilities, the Goldman strategists wrote. They forecast the S&P 500 will generate “a modest single-digit absolute return” next year as the “robust” profit and economic growth seen in 2018 slows.

Germany: PPI YOY 3.3% vs est of 3.3%

Today's Potential Rate Volatility: Average

There aren't any scheduled economic releases that can move rates. The only reason that potential volatility is slightly elevated is due to the volatility in the stock market and the off chance of an unexpected geopolitical event.

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

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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