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: Higher

Sigma Research said that said rates are trending worse this morning.  Last week the MBS market improved by +68 bps.  This was probably enough to affect rates or  fees.  The market is volatile already this morning, dropping about – 40 bps.

This Week’s Rate Forecast: Higher

According to Sigma Research over the weekend the Greek debt problem apparently saw some light; US stocks rallying this morning and mortgage rates are jumping. According to reports Greece made concessions on pensions; creditors have required Greece cut pension payments, until now Greece has resisted it. Euro-zone leaders warned they received the proposal late and played down the possibility of an immediate breakthrough. While this is good news overall for the EU, the uncertainty lifting in Greece will help to push mortgage rates higher.  However, this is by no means over.   Key economic reports this week; tomorrow durable goods orders and May new home sales, Wednesday Q1 GDP, Thursday May personal income and spending.

This Week’s Potential Volatility: High

According to Sigma Research the risk for volatility is high today and this week. This is nothing new.  The markets are already volatile this morning with the news out about Greece and we don’t expect anything different throughout the week.  We’ll be keeping a close eye on the market as economic reports are released for the US and the situation out of Greece unfolds.

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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