Published Date 7/25/2022
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 improved by +33 bps last week. This was enough to decrease 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) Recession watch and 3) Inflation
1) The Fed: We get their latest interest rate decision and policy statement Wednesday at 2 pm ET followed by a live presser with Fed Chair Powell. The markets have fluctuated greatly over the past 3 weeks on expectations between a 75BPS and 100BPS rate hike at this meeting, but more importantly, the expectations of future hikes as far as how much at each additional meeting until they pause and then start to decrease rates. The bond market will be very sensitive to their statement regarding the progress of the QT program and if they will speed up the pace of decreasing their weekly bond purchases.
2) Recession Watch: On Thursday we get the first print (will be revised several times) for the 2nd QTR GDP. The final reading on the 1st QTR GDP ended up at -1.6%, so if we a second reading of below zero in a row it is technically classified as a recession. The markets are forecasting a range of +0.5% to +0.9% but we could see a surprise lower.
3) Inflation: We get the Fed’s key measure of inflation on Friday with Core (ex food and energy) PCE. This is expected to show yet another massive MOM gain of 0.5% and a YOY gain of 4.7%. Headline PCE is expected to add another 0.9% on a MOM basis to get to a YOY increase of 6.7% (it was 6.3% last time around).
THIS WEEK’S POTENTIAL RATE VOLATILITY: HIGH
This morning markets are mostly treading water with most traders waiting on Wednesday. Volatility has started low this week but will spike with FOMC.
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
