Weekly Mortgage Rate Update (March 14th, 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

Sigma Research says that rates are trending unchanged this morning.  Last week the MBS market worsened by -60 bps.  This was enough to affect mortgage rates or  fees.  The market was very volatile last week.

This Week’s Rate Forecast: Neutral

We have a HUGE week for both domestic and foreign Central Bank and economic data. Three Things: Here are the three events that have the greatest potential to impact your pricing. 1) FOMC Meeting, 2) Oil Price, 3) Domestic Economic Data (Retail Sales, CPI).

Fed: We will have the FOMC (Federal Open Market Committee) interest rate decision and policy statement. But we will also have the release of their economic projections and a live press conference with Fed Chair Janet Yellen. In December, their dot-plot chart showed that the FOMC members anticipated up to 4 rate hikes in 2016. Currently the market had zero to one priced in. So, we will be paying close attention to that dot-plot chart to see if the Fed still is forecasting several rate changes.

Gold: WTI are moving off of their highs from last week as Iran basically is saying that they will sell everything that they can produce (legally or illegally) and will not join in on production cuts.

Domestic Economic Data: We get both PPI and CPI. Last time around the YOY Core CPI was at 2.2%, it will be very important to our markets if stay above that 2.00% level again. Retail Sales is the most important report of the week and the market is expecting it to retract from its strong January levels, given the weak Consumer Credit report last week – that might be the case.

This Week’s Potential Volatility: High

According to Sigma Research there’s a lot of news coming out this week to move mortgage rates, but nothing today. We expect today to be relatively calm ahead of the Fed and be economic news releases starting tomorrow.

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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