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Weekly Mortgage Rate Update (January 25th, 2016) 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: Lower

Sigma Research says that rates are trending slightly lower this morning.  Last week the MBS market worsened by -4bps.  This was not enough to affect rates or fees.  The market was extremely volatile last week.

This Week’s Rate Forecast: Neutral

The MBS market opened a little better this morning.  Stock indexes in pre-market trading at 8:30 AM EST slightly lower after a couple of days of improvement. Crude oil price improved last week but this morning trading lower. Crude presently is the hallmark for most all commodity prices and the inflation outlook. Supply continues to exceed demand by a wide margin and now with Iran coming on line and hungry for foreign currency oil has another big hurdle to improve. No economic reports schedules today.

This week markets will focus all attention to the FOMC meeting with the policy statement on Wednesday afternoon. Prior to the beginning of the year the Fed made it “clear” that markets could expect four rate increases this year, the first coming in March. Now that is highly unlikely with global markets under heavy selling and inflation, regardless of the constant Fed remarks that 2.0% increase is just around the corner.

This Week’s Potential Volatility: High

We don’t expect much movement in stocks and bonds early this week. The policy statement from the FOMC on Wednesday afternoon is key.  After the huge decline in US and global equity markets, the IMF and World Bank lowering their growth forecasts, how will the Fed frame it in the context of the remakes from the Dec FOMC statement and Janet Yellen’s press conference? The Fed has to be confused, there is no inflation now, nor will there be any this year. Global growth weakening as is the US outlook. Stock markets were exceptionally over-valued, and still are in the face of further economic weakness. Not much the Fed can do but admit the reality, although expect the FOMC will spin it as best it can.

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