Three things that can impact rates this week

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Published Date 1/10/2022

Three things that can impact rates this week

Published Date 1/10/2022

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: Higher

Mortgage rates are moving higher today. The MBS market worsened by -157 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Inflation and 3) Retail Sales

1) The Fed: Now that the bond market has moved up its expectations on when the Fed will begin to reduce its massive balance sheet as well as expectations for 3 to 4 rate hikes this cycle and their MBS bond buying program that is part of their pandemic QE ending in March. Here is this week's schedule:

01/10 Bostic

01/11 Powell, George, Mester, Bullard

01/12 Atlanta Fed Business Inflation Expectations

01/13 Harker, Brainard, Evans

01/14 Williams

2) Inflation: We get several inflationary data points this week with CPI and PPI taking center stage with YOY levels expected to break last month's records.

3) Retail Sales: Other than CPI and PPI, the most important economic release of the week will be Friday's Retail Sales data.

Treasury Dump:

01/11 3 year note

01/12 10 year note

01/13 30 year bond.

This week's Potential Rate Volatility: High

This morning we're seeing last weeks negative trend continue as banks begin hedging their expectations. Volatility is high as the none stop sell off starts to conflict with some market pressures.

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.

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