Published Date 4/20/2020
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 worsened by -58bps. This was enough to worsen mortgage rates or fees. Rate volatility was low last week.
Three Things: These are the three areas that have the greatest ability to impact rates this week 1) Coronavirus, 2) The Fed and 3) Stimulus
1) Coronavirus, of course, is driving the other two "things," here are the headlines that are starting off our week.
2) The Fed: The biggest player on the demand side of the MBS trade, the Federal Reserve Bank of New York, will once again purchase MBS this week but at a reduced rate than last week. They will purchase $3.188B of 2.5 and 3.0 coupons at 9:50 am ET, and then again at 1:00 pm ET. Unlike the past three weeks, they are not purchasing any 15 year MBS, and they are not purchasing Uniform (Fannie/Freddie) MBS above the 3.0 coupon - they had been purchasing 3.5 to 4.5 coupons over the past several weeks.
3) Stimulus: The funds for the SBA PPP loans ran out last Wednesday. The popular burger chain Shake Shack has said that they will return the $10M that they have already received. All eyes are on D.C. as they are looking to get an agreement to add more funds. It looks like Senate may vote on it as early as Monday and the House potentially by Tuesday.
Rate volatility for the last few weeks has dropped dramatically. This has helped the mortgage markets to settle a bit. As the Fed continues to purchase MBSs, look for rates to be relatively flat, but may trail a bit lower throughout the week (higher rates).
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.
NMLS: 240340
Progressive Mortgage
5567 Reseda Blvd #323, Tarzana CA
Company NMLS: 1882585
Office: 818-717-7172
Cell: 323-864-7001
NMLS: 240340
Cell: 323-864-7001