Published Date 5/12/2025
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 under pressure today. The MBS market worsened by -5 bps last week. This was not enough to increase mortgage rates or fees. The market experienced high volatility last week.
Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Tariffs, 2) Inflation and 3) Retail Sales.
1) Tariffs: Trade and Tariff negotiations/announcements/expectations will continue to be the main driving force for rates. The weekend negotiations with China led to a 90 day "cool off" period. Where China lowered tariffs on U.S. goods from 125% down to 10% and the U.S. lowered their tariffs of 145% down to 30%.
2) Inflation: We will get both CPI and PPI this week. Headline CPI is expected to flip from -0.1% all the way up to 0.3%. The hotter this data is, the worse it will be for rates.
3) Retail Sales: This is where the "rubber meets the road" between the extremely soft consumer survey data versus hard/actual data.
The Fed: Here is this week's schedule with the focus on Thursday's Fed Chair Powell speech:
05/12 Kugler
05/14 Waller, Jefferson, Daly
05/15 Powell, Barr
05/16 Barkin, Daly
This morning markets started under very heavy pressure but some of that has already backed off. Volatility has started at moderate to high levels and will likely be high this week.
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.
American Home Lending USA, LLC - NMLS ID: 71983. To verify licensing, visit NMLS Consumer Access (www.nmlsconsumeraccess.org). Equal Housing Lender.
NMLS: 19488
American Home Lending USA, LLC
240 S Buchanan St, Edwardsville IL 62025
Company NMLS: 71983
Office: 618-310-0091
Cell: 618-806-2281
Email: jbeck@ahlusa1.com
NMLS: 19488
Cell: 618-806-2281
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