Weekly Mortgage Rate Update (May 2nd, 2016) Hagerstown, MD Real Estate

How Rates Move:

Conventional overnment (FHA and VA) lenders set their rates based on the pricing of Mortgageand G-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

Sigma Research says that rates are trending slightly worse this morning.  Last week the MBS market improved by +41 bps.  This may’ve been enough to improve mortgage rates or  fees for the consumer.  The market was volatile last week.

This Week’s Rate Forecast: Neutral

The Big 3: The three biggest events to watch this week are: 1) Jobs Friday, 2) Manufacturing/Services data and 3) The Fed.

Jobs: We get a glut of jobs related data this week (ADP, Challenger Job Cuts, Weekly Claims, Non-Farm Payrolls, Unemployment Rate, Average Hourly Wages and more. The “more” includes lots of internal readings in other reports like Productivity (Unit Labor Costs) and others. The bond market will be focusing on cumulative theme of wages as higher wages seems to be the only threat of inflation that the Fed can hang their hat on.

Manufacturing/Services: We are loaded with data this week. We started out with ISM Manufacturing which only accounts for about 20% of our economic output. ISM was lighter than expected but it was still above 50.0 and the internal ISM Prices Paid jumped to 59 which was much higher than expectations of 52.0 and signals pricing pressures (inflation). Construction Spending was lighter than expected (0.3% vs est of 0.5%), but this is still a huge turn around from the last reading of -0.5%. The most important report of the week will be Wednesday’s ISM Services (80% of our economy), we also have Factory Orders and Productivity.

This Week’s Potential Volatility: High

As mentioned above, this week is likely to be very volatile due to all of the economic news being released.  Mortgage rates will not be influenced by any one report, rather mortgage rates will be looking at the overall theme of the data.

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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