Published Date 10/17/2022
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: LOWER
Mortgage rates are moving slightly lower today. The MBS market worsened by -96 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) Overseas News and 3) Manufacturing.
1) The Fed: We get the Fed’s Beige Book on Wednesday which is prepared specifically to be used in the next FOMC meeting. We also get a last barrage of Fed speeches before the media “blackout” period starts on Monday. The MBS market is assuming a 75BPS hike at their next meeting but we are focusing on direction on their QT and possible MBS sales as they mentioned it for the first time in last week’s Minutes.
2) Overseas News: One of the biggest forces of volatility in the bond market over the past two weeks has been out of Great Britain. It appears that they cleaned house and have one consistent message now. BofE Governor Baily says the BofE will be forced to move “more aggressively” than they thought at their August meeting and Truss’ administration has done a complete U-Turn on their fiscal policy to align with the BofE. We continue to see dismal data out of China and in fact, they cancelled a key economic report that was supposed to be released tomorrow. Europe is on deck with their expected rate hike at their next meeting.
3) Manufacturing: We get a lot of Manufacturing related data this week with Empire Manufacturing, Industrial Production and Capacity Utilization, Philly Fed and some other region reports. Leading into the Fed meeting, this data is key to gauge economic growth (or lack there of).
THIS WEEK’S POTENTIAL RATE VOLATILITY: HIGH
This morning markets are getting a small boost on the recessionary manufacturing data released Monday morning. Volatility will be high this week on the unemployment data and any Fed comments.
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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