Published Date 11/30/2020
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.
Mortgage rates are trending sideways this morning. Last week the MBS market improved by +2bps. This was not enough to move rates lower last week. We saw low rate volatility through the week.
Three Things: These are the three areas that have the greatest ability to move rates this week. 1) Central Bank, 2) Jobs, and 3) Coronavirus.
1) Central Bank: We will get the latest interest rate decision and policy statement from the Reserve Bank of Australia, but the market focus will be on speeches by the ECB President Christina Lagarde and our Fed Chair Powell, who will testify before the Senate and House on Tuesday and Wednesday. We will also get the Fed's Beige Book on Wednesday.
2) Jobs: We have a ton of jobs/wage-related data this week culminating with Big Jobs Friday, where we will get the Unemployment Rate, Non-Farm Payrolls, and most importantly, Average Hourly Earnings. We will get ADP Private Payrolls, Challenger Job Cuts, Initial Weekly Jobless Claims, and internal employment readings within the ISM releases throughout the week.
3) Coronavirus: It's yet another "Medical Monday" (used be called "Merger Monday" in another day and time) where Moderna has joined the list of a vaccine that is over 94% effective and is filing for emergency use approval with the FDA today. The key to this week is that the Senate is back in session after their holiday-recess, and markets will be very reactive to any movement in talks on a stimulus package that may - or may not- be practical before January 20th. We also have a debt ceiling and looming government shut down right around the corner.
The rate markets will pay very close attention to the jobs numbers throughout the week. Depending on how close the actual numbers are to the predictions, the jobs numbers could spike volatility. Once again this week, rate markets will pay close attention to coronavirus developments.
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: TBWSAll 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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Mortgage Solutions Group, PLLC
Company NMLS: 2179191
Cell: 512-733-6207
NMLS: 181064
Cell: 512-733-6207
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