Three things that can impact rates this week

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Published Date 2/14/2022

Three things that can impact rates this week

Published Date 2/14/2022

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 -84 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

Today's Rate Forecast: Higher

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

1) Russia: We have large swings in long bond yields as the speculation of escalation or de-escalation with Russia/Ukraine changes. This in turn drives foreign investment into our notes and bonds as a safe-haven.

2) The Fed: We will get the Minutes from their last FOMC meeting and hear from several voting and nonvoting Fed members this week. The MBS market is the most concerned about QT, the reduction of their balance sheet - timing/scale/scope.

3) Inflation: We got a monster CPI report last week. This week, we get the front-end of that equation which portends the next round of CPI data with this week's PPI data. We also get Import/Export Prices.

Today's Potential Rate Volatility: High

This morning bond markets are selling off as things currently look stable geopolitically. Volatility is high as markets watch the situation abroad and look to PPI tomorrow.

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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