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: HIGHER
Mortgage rates are moving higher so far today. The MBS market worsened by -7 bps yesterday. This may havee been enough to worsen rates or fees. The rates experienced moderate volatility yesterday.
TODAY'S RATE FORECAST: HIGHER
Jobs: Initial Weekly Jobless Claims hit 225K vs est of 220K. The more closely watched 4-week moving average dropped from 236K down to 229K.
GDP: We finally got the preliminary (will be revised several times) GDP report for the 4th QTR which was delayed due to the government shutdown, and it came in much better than expected with a solid growth rate of 2.6% vs est in the 1.8% to 2.3% range. 4th QTR 2017 to 4th QTR 2018 is now 3.1% and the calendar year is at 2.9%. Any way you slice it, it's a robust 3.0% growth rate for 2018.
Manufacturing: The bell-weather Chicago PMI was a blockbuster, coming in at 64.7 vs est of 57.0. Any reading above 50 is expansionary, and readings above 60 are extremely strong."
Fed: Vice Chair Richard Clarida acknowledged that growth in 2018 was "robust" and re-emphasized that the Fed should be "patient" and is "data dependent."
China: Manufacturing PMI 49.2 vs est of 49.5/Services PMI 54.3 vs est of 54.5
Germany: CPI YOY 1.6% vs est of 1.5%
TODAY'S POTENTIAL RATE VOLATILITY: HIGH
With the robust GDP and PMI numbers, mortgage rates would typically be skyrocketing. However, the uncertainty with trade and many other geopolitical events is helping to keep a lid on rates for the time being. The bias is toward slightly higher rates and increased volatility.
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact Mike or Liz.