Existing Home Sales Dip In November But Also Set Records

TODAY’S MORTGAGE RATE SUMMARY (Published Date 12/19/2019)

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.

RATES CURRENTLY TRENDING: NEUTRAL

Mortgage rates are moving sideways so far today.  The MBS market worsened by -9 bps yesterday. This caused rates or fees to mostly move sideways for the day. The rates experienced low volatility yesterday.

TODAY’S RATE FORECAST: NEUTRAL

Housing: November’s existing home sales set a couple of November records. The median home price was $271,300, which is the highest price on record, and months of available inventory hit 3.7 months, which is the lowest on record. The total unit sales hit 5.35M, which was lighter than expectations of 5.44M, but there was not enough inventory to support further sales gains.

Jobs: Initial weekly jobless claims were higher than expected (234K vs. est. of 225K). The more closely watched 4-week moving average is still a mild 225,500.

Manufacturing: The Philly Fed regional manufacturing survey was lighter than expected but just made it to positive territory (0.3 vs. est. 8.0).

Central Bank:

• Bank of England kept its key interest rate at 0.75%
• Bank of Japan kept its key interest rate at -0.1%
• Sweden’s Central Bank (Riksbank) kept its key interest rate unchanged but finally moved their Repo rate out of the negative from -0.25% to 0.0%
• Norway’s Central Bank (Norges Bank) kept its key interest rate at 1.5%

TODAY’S POTENTIAL RATE VOLATILITY: AVERAGE

Markets continue to ignore the economic data and impeachment. The focus remains on trade. The trade news continues to be positive for the signing of the agreement to occur in January. As long as the sentiment remains positive, look for rates to move sideways on low volatility heading into the new year.

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.

Source: TBWS