Fed still looking at three rate increases this year

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Published Date 3/6/2018

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 to slightly lower so far today.  The MBS market worsened by -22 bps yesterday. This probably was enough to worsen mortgage rates or fees.   The rates experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Factory Orders: The January release is expected to show a pullback of -1.3% from December's pace of 1.7%.

Geopolitical: North Korea (still technically "at war" with South Korea) is willing to hold talks with the United States on denuclearization and willing to suspend nuclear tests while those talks are underway according to a South Korean delegation that returned from the North where it met leader Kim Jong Un. North and South Korea will hold their first summit in more than a decade in late April.

Fed: Dallas Fed President Robert Kaplan (non-voting member) said that "It's three for this year. I think we should get started sooner rather than later, though" which is waking back expectations for four hikes this year.

We will hear from Kaplan (again) and Brainard, but they will both speak after the bond market closes.

Central Bank: The Reserve Bank of Australia was first of several Central Banks to release their interest rate and policy statement this week. They kept their benchmark rate at 1.5%.

Today's Potential Rate Volatility: Average

While there isn't a lot of economic news due out today that is likely to move rates, we do have the North Korea developments and the trade war talks that have the ability push mortgage rates around. Look for relatively moderate market volatility today, unless something totally unexpected occurs.

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.

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Thomas Werbeckes

Mortgage Advisor

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Finance of America Mortgage

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