Weekly Mortgage Rate Update (December 26th, 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 moving lower so far today.  The MBS market improved by +35 bps yesterday. This was enough to improve mortgage rates or fees.   The market experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: Weekly Initial Jobless Claims were close to market expectations (265K vs est of 263K) and the more closely watched 4 week moving average moved lower to 263K which continues a very low trend line.

Wholesale Inventories: The preliminary November reading (will be revised) was much higher than expected, rising 0.9% vs est of only 0.1%.

Treasury auction: Today we have our 7 year note auction. Will it see the same type of demand as yesterday’s blockbuster 5YR?

Today's Potential Rate Volatility: Average

Mortgage rates have moved slightly lower over the last couple of days, but continue to trade in a very tight range. Stock and bond markets are trading on very thin volume which could increase volatility. The outcome of the 7year note auction today could increase volatility and move mortgage rates slightly higher or lower.

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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