Consumer Confidence Rebounds in February

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:

Mortgage rates are moving sideways so far today. The MBS market improved by +1 bps yesterday. This wasn't enough to improve rates or fees. The rates experienced low volatility yesterday.

Today's Rate News:

Housing: We finally got the December (delayed due to the government shutdown) New Housing Starts data which missed to the downside (1.078M vs est of 1.250M). But Building Permits were stronger than expected (1.326M vs est of 1.290M). The December YOY FHFA Home Price Index showed a gain of 5.6%.

Consumer Confidence: The February Consumer Confidence survey shot up and blew the doors off of the estimates, hitting 131.4 vs est of 125.0. Plus, January was revised upward from 120.2 to 121.7.

Fed: Fed Chair Powell will give his semi-annual monetary report to the Senate today at 10:00 am ET. We will first get his prepared remarks, listen to him read those prepared remarks and then suffer through the Q&A. Bond traders will be looking for more discussion on the path of expected inflation and on the timing of the balance sheet wind down.

Debt Ceiling: The U.S. will once again hit their debt ceiling on March 1, Treasury Secretary Steven Munuchin says that he will authorize "extraordinary measures" which could keep funding flowing until August though.

Trade War: President Trump is in Vietnam for a summit with N.K. Kim Jong Un which starts today.

Treasury Dump: Today, we have our 7-year note auction at 1 pm ET.

Germany: Consumer Confidence 10.8 vs est of 10.8

Brexit: PM Theresa May told Parliament that she would hold a series of votes on her 'Plan B' Brexit deal, a measure to take 'no deal' off the table, and possibly a third vote on whether to ask for an extension of Article 50 if the vote on "Plan B" fails. The votes would be held as follows: March 12 will be a vote on "Plan B", if that fails, motion will likely be tabled for amendment vote on March 13 on whether Commons would support leaving without a deal; if that fails, amendment vote on extending Brexit deadline would be tabled on March 14.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact Mike (858) 602-2100 or Liz (858) 945-6136 to discuss your options.

Source: TBWS