TODAY'S MORTGAGE RATE SUMMARY
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.
RATES CURRENTLY TRENDING: NEUTRAL
Rates are moving sideways so far today. The MBS market ended the day up +13 bps on moderate volatility. This caused rates or fees to move slightly lower.
TODAY'S RATE FORECAST: NEUTRAL
Housing: December New Housing Starts were much higher than expected with an annualized pace of 1.669M vs. est. of 1.56M. New Building Permits also beat expectations 1.709M vs. est. of 1.604M. The bright spot is that Single-Family Starts (THE housing market) jumped 12% to its highest pace since December 2006.
Jobs: Initial Weekly Jobless Claims were lower than expected but still at an alarmingly high rate, 900K vs. est. of 910K. The more closely watched 4-week moving average increased to 848K. Continuing Claims were 5.054M vs. est. of 5.400M.
Manufacturing: The January Philly Fed Manufacturing Survey Index was very strong with a 26.5 reading vs. est. of 12.0.
Central Bank: The Bank of Japan kept its key interest rate at -0.10%. The European Central Bank kept its key interest rate at 0.0%.
TODAY'S POTENTIAL RATE VOLATILITY: LOW
Rate markets are showing little volatility today after pushing slightly lower yesterday. The housing market continues to be on fire, but it's having little effect on rates. Look for rates to move sideways on moderate to low volatility today, particularly after the weak jobless claims.
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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