Published Date 5/31/2022
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 improved by +55 bps last week. This was enough to decrease 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) The Fed, 2) Jobs and 3) ISMs
1) The Fed: May is coming to an end and the Fed’s “Quantitative Tightening” or “QT” where they begin to repurchase fewer and fewer Treasury notes and Agency MBS begins June 1. We kick off the week with Biden and Powell meeting at the White House. We will get their Beige Book on Wednesday which is released in advance of their June FOMC meeting.
2) Jobs: We get a ton of job or wage related data all week with ADP Private Payrolls, JOLTS, Job Cuts, Weekly and Continuing Jobless Claims and then culminating with Friday’s BLS Jobs report with Non Farm Payrolls, Average Hourly Earnings and the Unemployment Rate.
3) ISMs: We get a lot of manufacturing related data with Chicago PMI and ISM PMI taking center stage. But we also get Factory Orders, Non Farm Productivity and Unit Labor Costs. Rounding out the week will by ISM Non Manufacturing PMI.
Central Banks: The Bank of Canada is expected to raise their interest rate at their meeting on Wednesday.
TODAY’S POTENTIAL RATE VOLATILITY: HIGH
This morning markets are pulling back from last weeks gains. Volatility has been high to start.
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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