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Weekly Mortgage Rate Update (December 28th, 2015) Hagerstown, MD Real Estate

Rates at a Glance

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

Sigma Research says that rates are trending slightly worse this morning.  Last week the MBS market worsened by -24 bps.  This was probably enough to worsen rates or  fees.  The market was moderately volatile last week.

This Week’s Rate Forecast: Neutral

Last week Initial Jobless Claims fell once again and neared a 42 year low as labor market conditions continue to tighten. Personal Income rose more than expected and continued a eight month trend of solid wage gains. The Consumer Sentiment report was stronger than expected and one of the reasons was an increase in favorable expectations of the job market. So, overall it was a good week for the labor sector.  Overall these numbers are good for the economy and slightly negative for mortgage rates. Durable Goods Orders were much stronger than expected due to a nice surge in automobile orders, and the 3rd QTR GDP (3rd release) was a tick better than expected due mainly to inventory levels.  So, basically we had a week of positive economic data while seeing no threat of inflation and that is a welcome combination. We have another holiday- shortened week with the bond market closing early on Thursday and reopening on Monday.

There are three things that we’ll be watching this week that could cause some volatility.

Chicago PMI: will this break back above 50? The higher this reading is, the worse it is for mortgage rates.

Consumer Confidence:  is expected to rise, it will take a much weaker than expected reading for mortgage rates to significantly improve.

7YR Treasury auction: Now that we have officially entered a rate tightening cycle….how will dealers/investors price the risk of future rate hikes?

This Week’s Potential Volatility: Low

According to Sigma Research  there are a few economic events that could cause mortgage rate volatility, but we’re not expecting too much to happen to mortgage rates this week.  However, if any of these numbers miss big, with light trading, we could see mortgage rate shift dramatically for a short period of time.

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.

Your weekly mortgage rate update is provided by:

Maximized Mortgage Solutions