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Weekly Mortgage Rate Update (July 11th, 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: Neutral

Mortgage rates are trending unchanged this morning.  Last week the MBS market improved by +25 bps.  This was probably enough to improve mortgage rates or  fees.  The MBS market very volatile last week.

This Week’s Rate Forecast: Neutral

Here are the three top items that will be getting the attention of Bond traders this week: 1) Central Bank Action, 2) Brexit news and 3) The Fed. Notice that the top three items DO NOT include our Treasury auctions or economic data.

1) Central Bank Action: The Bank of Canada will announce their latest Interest rate and policy on Wednesday but its Thursday’s Bank of England action that will really drive markets as they may vote to lower rates in the wake of the Brexit arrangements. Also, the Bank of Japan is said to be ready to announce new “helicopter” money this week in the form of more asset purchases and potential rate decreases.

2) Brexit: The markets have been eagerly waiting to see when Great Brittan would elect a new Prime Minister as the divorce proceedings with the EU cannot begin until they have a new leader. And this morning it appears that we our answer as the sweet 16 bracket was narrowed down to two an now…one. The leading contender Andrea Leadsom has dropped out this morning leaving only British Home Secretary, Theresa May left in the race. This removes some uncertainty in the market place as the selection of a PM could have dragged on to September.

3) The Fed: We have the Fed’s Beige Book on Wednesday which will give each of the 12 districts a chance to weigh in on their own regional growth but we also get a slew of speeches this week. Even though the above will be the main driving force in bond demand this week, we actually have a very robust domestic economic calendar with very heady reports like Retail Sales, PPI and CPI, Wholesale and Business Inventories, JOLTS and Industrial Production to name a few.

This Week’s Potential Volatility: High

We’re expecting continued volatility this week. A lot of events can move mortgage rates this week, but we’re expecting to see increased volatility going into Thursday and Friday’s economic 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.

Your weekly mortgage rate update is provided by:

Maximized Mortgage Solutions