Weekly Mortgage Rate Update (May 16th, 2016) 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 unchanged this morning.  Last week the MBS market worsened by -4 bps.  This wasn’t enough to worsen mortgage rates or  fees.  The MBS market was fairly calm last week.

This Week’s Rate Forecast: Neutral

The Big 3: Here are the items that have the greatest potential to impact pricing this week – 1) The Talking Fed, 2) Oil and 3) CPI.

1) The Talking Fed: The FOMC minutes will get the most attention but after last week’s string of “hawkish” comments from voting members, we are very interested to see that trend carries through this week or if (as usual) we get a bunch of contradictory “dovish” comments

2) Oil: WTI is trending upward on growing Nigerian oil output disruptions. Last week is was Canadian wild fires (briefly). Its clear that its all supply for the market right now. If there is another source of disruption, we could see oil make a move towards $50 and that could weigh on our pricing.

3) Inflation? Well, we did see an increase in PPI but it was not significant. This week we get CPI and the bond market will be paying close attention to the YOY Core data which has been trending above 2.0%. If it moves north of 2.3%, that would be negative for pricing.

This Week’s Potential Volatility: High

The Fed will be the biggest piece of news this week but things still look bullish. The markets may go either way this week with room in either direction.

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.

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