Three things that can move mortgage rates this week

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Published Date 2/5/2018

This Week'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: Higher

Mortgage rates are trending slightly higher this morning. Last week the MBS market worsened by -102 bps. This moved mortgage rates higher last week. Mortgage rate volatility was high last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week: 1) Government Shutdown 2) Fed and 3) Across the Pond.

1) Government Shutdown: Here we go, another deadline this week for a Government shutdown. Will we get yet another emergency measure to "kick the can" for another two weeks? Or with the two sides so far apart will we finally get the promised shutdown? Or will there be a miracle and both sides will come to a long-term agreement?

2) Fed: Yellen is gone. Today, Jerome Powell will officially be sworn in as our Fed Chair, and the new reign will begin. The bond market views him as a little more pragmatic than uber-dove Yellen. We are waiting to see who the new Vice Chair will be. Here is a list of speeches this week:

02/05 - Jerome Powell
02/06 - James Bullard
02/07 - William Dudely, Charles Evans, John Williams
02/08 - Robert Kaplan, Neel Kashkari
02/09 - Esther George

3) Across the Pond: The spotlight will be on the Bank of England's Central Bank meeting on Thursday. We will also hear from key BofJ and ECB representatives. There will also be some movement in the Brexit situation and key reports out of China.

Treasury Auctions this Week:

02/06 3 year note
02/07 10 year note
02/08 30 year bond

This Week's Potential Volatility: High

The manufacturing numbers are helping to push mortgage rates a bit higher today. The one thing that can help keep a lid on mortgage rates is the potential of a government shutdown. If that somehow gets resolved quickly, we could see mortgage rates push higher with increased volatility this week.

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.