Published Date 5/23/2022
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 +26 bps last week. This may have been 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) Inflation, 2) Davos and 3) The Fed.
1) Inflation: We get the Fed’s key measure of inflation (Core PCE) on Friday. Both PPI and CPI were extremely high last time around but were just off of their YOY pace causing investors to trade on the “inflationary peak” theory. The higher this data set is on Friday, the worse it will be for rates, the lower it is, the better it will be for rates.
2) Davos: This week we have the World Economic Forum in Davos, Switzerland. The bond market will be sensitive to comments/speeches/white papers on inflation, economics etc.
3) The Fed: Taking center stage on Wednesday will be the release of the Minutes from the last FOMC meeting where they announced a 50BPS rate hike as well as a June 1 start to their “QT” program.
Treasury Sales: We have a series of shorter term note auctions this week.
05/24 2 year note
05/25 5 year note
05/26 7 year note
THIS WEEK’S POTENTIAL RATE VOLATILITY: HIGH
This morning markets are mostly treading water. Volatility is low to start 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.
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