This Week’s Mortgage Rate Summary

Eric Broermann February 25, 2019

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 sideways this morning. Last week the MBS market improved by +10bps. This caused rates to move mostly sideways for the week. We saw low rate volatility through the week.
 

This Week’s Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week: Fed, Trade War, and Domestic.
 
1) Fed: Fed Chair Powell will give his semi-annual monetary report to the Senate and House this week. We also have a lot of Fed speeches this week. Bond traders will be looking for more discussion on the path of expected inflation and the timing of the balance sheet wind down.
 
  • 02/26 – Jerome Powell – Senate

  • 02/27 – Jerome Powell – House

  • 02/28 – Richard Clarida, Raphael Bostic, Robert Kaplan, and Patrick Harper.
2) Trade War: President Trump has postponed the March 1st deadline that would have increased tariffs on $200B of Chinese imports from a rate of 10% to 25% citing “substantial progress” in trade negotiations and said that they are currently working on a summit in March where President’s Trump and Xi would sign an agreement in Mar-a-Lago. North Korea is also front-and-center as President Trump heads to Vietnam for a summit with N.K. Kim Jong Un. Also, the United States is looking to hit the EU with auto tariffs with the EU vowing to retaliate.
 
3) Domestic: For a refreshing change of pace, we actually have some big-name reports that have the gravitas to move rates this week. The stronger these reports are, the worse it will be for mortgage rates, the worse that they are – the better it will be for rates. The “biggies” this week are the preliminary 4th QTR GDP, PCE, and ISM Manufacturing.
 
Treasury Auctions this Week:
 
  • 02/25 – 2-year and 5-year note
  • 02/26 – 7-year note
This Week’s Potential Volatility: Average
 
We have a good number of economic reports due out this week that have the potential to move mortgage rates. Rates have been moving sideways for some time now. It would take something unexpected, like a complete breakdown in trade talks, to push rates lower. Look for rates to move sideways to higher on relatively modest volatility.
 

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.
 

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events that may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assumes any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability with respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
 
McLean Mortgage Corporation NMLS ID #99665 (www.nmlsconsumeraccess.org)

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