Three things that could impact rates this week

Published Date 7/18/2022

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: NEUTRAL

Mortgage rates are moving sideways today. The MBS market worsened by -3 bps last week. This was not enough to increase mortgage rates or fees. The market experienced high volatility last week.

THIS WEEK’S RATE FORECAST: NEUTRAL

Three Things: These are the three areas that have the greatest ability to impact rates this week: 1) Artificial Demand, 2) Central Banks and 3) Treasury Sales

1) Artificial Demand: The MBS market will continue to be supported by direct purchases of TBA MBS from the Federal Reserve. However, their pace of purchases will decrease. For example last week, they purchased 30Y UMBS at $924M twice during the week. But this week that will move lower to $832M, twice per week.

07/18 30Y MBS $832M

07/19 30Y GNMA $493M

07/20 30Y MBS $832M

07/21 30Y GNMA $493M

07/22 15Y MBS $180M

2) Central Banks: We hear from three major Central Banks this week. The markets currently do not expect anything major from The Bank of Japan or the Peoples Bank of China. However, the European Central Bank is expected to raise their key interest rate by at least a 1/4 point for the first time in a decade.

3) Treasury Sales: We have our last long-term bond auction prior to our Fed meeting with this week’s 20 year bond on Thursday.

THIS WEEK’S POTENTIAL RATE VOLATILITY: NEUTRAL

This morning markets have been a little choppy with a slight negative bias. Volatility have started out at moderate levels but will likely spike later in the week.

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.

Not all borrowers qualify for all programs, must meet underwriting guidelines and are subject to credit review and approval. This does not constitute a commitment to lend.  JC Financial Solutions, Inc is an Equal Housing Lender. NMLS 365033, CABRE 01445232