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 moving sideways so far today.  The MBS market worsened by -54 bps last week. This was enough to worsen mortgage rates or fees.   The market experienced moderate volatility last week.

This Week's Rate Forecast: Neutral

Three Things: These are the three things that can move mortgage rates this week. 1) Across the Pond, 2) Geopolitical and 3) Domestic 1) Across the Pond: The biggest event of the week is the European Central Bank's interest rate decision and policy statement on Thursday. Just like our own Federal Reserve did at their last meeting, the ECB is expected to announce a reduction of their monthly bond purchases. The markets will react strongly depending on the scope and term of their "taper". It's widely expected that they will drop from 60B Euros down to 40B Euros and keep it at that level for the next six months. However, they may cut less than that or more and they may draw out the timeline more. 2) Geopolitical: There is plenty for the bond market to digest this week but taxes will continue to get the most attention as leaks and speculation of what will or will not be in the reconciled Budget Bill between the House and Senate. Already, the White House has come out and said that they will not touch the current 401(k) rules which the media had been reporting would be changed. 2 a) Fed As we get closer to the supposed November 2nd deadline (subject to revision) where we would get President Trump's nomination for the next Fed Chair, momentum continues to shift from one of the five short-listers to another. As sentiment shifts to more "hawkish" candidates, it can have a significant on mortgage rates. Current Short List:

• Powell
• Warsh
• Taylor
• Yellen
• Cohn

3) Domestic: Friday's 1st release of the 3rd QTR GDP could be a real market mover. Originally, it was thought that the hurricanes would drag down economic growth in the 3rd QTR but would more than make that up and sling-shot ahead in the 4th QTR. But we have had a slew of much stronger than expected economic reports from September and now the expectations are that the first print of the GDP data could be as high as 2.5%. This Week's Potential Volatility: Average Mortgage rates are likely to stay in a tight range today. However, we could see some volatility this week for mortgage rates due to the ECB meeting and GDP numbers.

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.