Weekly Mortgage Rate Update (August 14th, 2017) Hagerstown, MD Real Estate

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.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +13bps.  This may’ve been enough to slightly improve mortgage rates or fees.  Mortgage rates showed relative low volatility throughout the week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that bond traders will be paying the most attention to and have the greatest ability move mortgage rates. 1) Geopolitical, 2) Fed and 3) Domestic.

1) Geopolitical: While the headlines continue to stream this weekend’s news out of VA. The bond market will focus on North Korea. MBS prices traded at very elevated levels last week in large part due to a flight to safety over the ever-escalating talk from both sides. If the rhetoric pulls back, then the flight to safety will pull back. Also on the radar is this week’s NAFTA meeting between the U.S., Canada, and Mexico which starts Wednesday. The bond market is also very much concerned about the debt ceiling which is very quickly approaching this month and will be sensitive to any news on that front.

2) Fed: We will get the Minutes from their last FOMC meeting on Wednesday. We will be combing through the comments to see if there is any further direction on timing of them tapering their massive amount of purchases of Treasuries and MBS. We also hear from voting members Neel Kashkari and Robert Kaplan this week but we also heard from them last week and don’t expect anything new out of them.

3) Domestic: Retail Sales will get the most focus this week. This has been very stubborn as of late as it not showing an increase in sales that correlates in any way with the consistent rise in wages. This is the only piece of economic data that has the gravitas to move the needle of mortgage rates. We also get some housing news with Weekly Mortgage Applications, Home Builder’s Sentiment, Housing Permits and Building Starts. On the manufacturing side, we get regional reports from NY, Philly, and Hotlanta as well as Industrial Production and Cap Utilization.

China (number 2 economy): Their Retail Sales came in at 10.4% vs est of 10.8%.

Japan (number 3 economy): Their 2nd QTR GDP was red hot at 4.0% vs est of 2.5%.

This Week's Potential Volatility: Average

Mortgage rate volatility has the potential to spike depending on what happens with any of the three things above.  Today we’re looking for mortgage rates to move sideways with relatively low volatility.

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.

Your weekly mortgage rate update is provided by: