Weekly Mortgage Rate Update (November 14th, 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: Higher

Mortgage rates are trending higher this morning.  Last week the MBS market worsened by -201 bps.  This was enough to worsen mortgage rates or fees.  Mortgage rates were very volatile last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week. 1) Trump correction, 2) Fed and 3) Domestic.

1) The Trump Correction: We are just at the beginning of the “Great Unwinding” in the bond market. Last week saw a pronounced sell off in bonds as bond traders see a higher potential for economic growth under Trump. As his policies are firmed up and as he adds staff in key areas, the bond market will continue to react and to sell off helping to increase mortgage rates.

2) Fed: We have a glut of Fed speak this week with the focus on Thursday’stestimony by Janet Yellen. While the MBS market has sold off…. we still do not have a December rate hike priced in. So, any “hawkish” commentary could pressure MBS and even cause some traders to add a higher probability of rate hikes in early 2017 as well.

• 11/14 Robert Kaplan, Jeffrey Lacker and John Williams.
• 11/15 Eric Rosengren and Stanley Fischer
• 11/16 James Bullard, Neel Kashkari and Patrick Harker
• 11/17 William Dudley and Janet Yellen
• 11/18 James Bullard, Esther George and Robert Kaplan

3) Domestic: There is no economic data today, but on Tuesday we get the most important report of the week – Retail Sales. PPI and CPI will also get a lot of attention but really, these reports will have much less of an impact as they historically have had as traders are focusing on the prospects of high growth in 2017 and not so much about where we were a month or two ago.

Housing: These reports won’t have an impact on mortgage rates but we always pay close attention to the state of our housing market which has been very strong as of late. This week we get Home Builders Sentiment, Housing Starts, Building Permits and Mortgage Applications.

This Week's Potential Volatility: High

Mortgage rates will continue to be very volatile this week while the mortgage rate market continues to digest what a Trump administration will look like.

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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