Three things that can move mortgage rates this week

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Published Date 2/20/2018

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 sideways so far today. The MBS market improved by +9 bps last week. This wasn't enough to improve mortgage rates or fees. The rates experienced moderate to high volatility.

Today's Rate Forecast: Neutral

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

1) Fed: We will get to read the Minutes to Janet Yellen's last FOMC meeting in January where they voted unanimously not to raise rates at that time. But we also get new Fed Chair Powell's testimony and the Fed Monetary Policy Report on Friday which will be crucial. We also hear from a lot of voting members with the March FOMC meeting creeping up on us quickly:

02/21 Harker, FOMC Minutes
02/22 Kashkari, Quarles, Dudley, Bostic
02/23 Powell - Monetary Policy Report, Williams, Dudley, Mester

2) Across the Pond: We get key speeches from Central Bank members as well as some significant economic releases.

Japan: Nikkei Manufacturing, BofJ Funo speech, CPI.

GDP Eurozone: ECB Non-Monetary Policy Meeting, Consumer Confidence, ECB Monetary Policy Accounts, CPI,

Great Britain: Unemployment Rate, BofE Carney Speech, GDP

3) Treasury: We will dump more of our debt into the saturated marketplace this week so we can continue to fund our deficit. These are all short-term notes, and we will see us swap out old debt at lower rates into new debt at higher rates.

02/21 2 year Treasury note
02/22 5 year Treasury note
02/23 7 year Treasury note

Today's Potential Rate Volatility: Average

There's not a lot of economic news that will likely move rates and cause volatility. The Fed is the most likely event to move mortgage rates this shortened 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

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