Rates Flat As Home Builders Remain Upbeat, Retail Sales Jump, And Jobless Claims Drop

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

Mortgage rates are moving sideways so far today.  The MBS market worsened by -3 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: The January NAHB Housing Market Index matched market expectations of 75, which is very strong, considering any reading above 50.0 is positive.

Retail Nation: Retail Sales were much stronger than expected, with the key ex-autos figure showing a MOM gain of 0.7% vs. est. of 0.5%. The headline retail sales data matched market expectations with an increase of 0.3%, but its really a small beat due to the upward revision in November.

Import Prices: A big beat on the YOY number, which showed a gain of 0.5% vs. est. of -1.2%.

Manufacturing: The January Philly Fed Manufacturing Index blew the doors off of estimates with a 17.0 reading vs. an expected 3.8.

Jobs: Initial Weekly Jobless Claims were lighter than expected (204K vs. est of 216K). The more closely watched 4-week moving average fell to 216,250.

TODAY’S POTENTIAL RATE VOLATILITY: AVERAGE

The economic numbers were excellent this morning, and we have the singing of the China trade agreement. Yet, rates are flat. Typically, with this kind of positive news, rates would be moving higher. Rate markets are slightly concerned by impeachment, Iran, and Brexit, which is helping to keep a lid on rates. Look for rates to continue to move sideways for the day on moderate 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.

Source: TBWS