Published Date 3/19/2018
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 +13bps. This probably wasn't enough to improve mortgage rates or fees. Mortgage rates continue to move sideways with relatively low volatility.
Three Things: These are the three items that have the greatest ability to impact mortgage rates this week. 1) Fed, 2) Across the Pond and 3) Geopolitical.
1.) Fed: Tuesday starts two days of meetings for the Federal Open Market Committee (FOMC) which will culminate with Wednesday's policy announcement. This meeting will be closely watched as it is widely expected to be the first rate hike of the year. But equally important is the release of their Economic Projections which includes the famous "dot plot chart' which shows the market what the mean expectations are from all of the Fed members (both voting and non-voting) of the Fed Funds Rate from now through 2020. This is where the market gets the expected number of rate hikes for this year and the next year. This will also be Fed Chair Powell's first live press conference following a Fed meeting, and rate hike and his comments will drive the markets.
2.) Across the Pond: The G20 Finance Ministers meeting among the world's largest 20 economies will get a lot of attention Monday and Tuesday. But it is news/rumors of the ECB announcing a new policy to end their QE soon that will drive markets the most.
3.) Geopolitical: The focus is on Brexit with EU leaders meeting in Brussels to sign off on the new Brexit guidelines. Also, the bond market will continue to react to news out of the U.S. regarding Tariffs.
Mortgage rates are likely to move sideways until the Fed meeting on Wednesday. While the market is expecting the Fed to increase rates, it will be paying close attention to the Fed's outlook on future hikes. This could cause some rate volatility for the end of the 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.
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