Market Movers: GDP, Central Banks And Coronavirus

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 -2 bps yesterday. This caused rates or fees to mostly move sideways for the day. The rates experienced moderate volatility yesterday.

TODAY’S RATE FORECAST: NEUTRAL

GDP: We got our first look at the 4th QTR GDP, which came in at a 2.1% growth rate and matched the market consensus.

Jobs: Initial Weekly Jobless Claims hit 216K vs. est. of 215K. The more closely watched four-week moving average moved a smidge lower to 214,500.

Central Bank: The Bank of England kept its key interest rate unchanged at 0.75%. There was much market speculation that it would be a toss-up on if they would cut rates at Governor Mark Carney’s very last meeting. But they were wrong as the vote was not even close at 7-2.

Germany: Unemployment Rate 5% vs. est. of 5%, CPI YOY 1.7% vs. est. of 1.7%

Eurozone: Unemployment Rate 7.4% vs est of 7.5%. Consumer Confidence -8.1 vs est of -8.1

TODAY’S POTENTIAL RATE VOLATILITY: AVERAGE

We’ve shifted from the markets being hyperfocused on trade to markets shifting focus to the coronavirus. The concern of expansion of the virus is helping to keep rates lower than they otherwise would be. Look for this trend to continue in the short to medium term.

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