Market Update: Housing, Fed 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: LOWER
Mortgage rates are moving lower so far today. The MBS market improved by +65 bps yesterday. This may’ve caused rates or fees to move lower for the day. The rates experienced moderate volatility yesterday.
TODAY’S RATE FORECAST: LOWER
Housing: February New Home Sales came in at 765K vs. est. of 750K.
Manufacturing: Richmond Fed Manufacturing Index for March 2.0 vs. est. of 9.0.
Treasury Dump: We kick off three days of dumping our debt into the marketplace with our shorter-term 2 year Treasury note.
The Fed: They will purchase a total of $50B in MBS today. Most notably at 11:15 am ET and 2:00 am ET for Agency 2.5, 3.0, and 3.5 coupons.
Coronavirus: The following are the key headlines that the bond market is watching this morning.
- Largest one day jump in U.S. Cases with over 10K new cases, 100 new deaths.
- U.S. Cases at least 46,450, deaths 593.
- 2020 Olympics officially postponed.
- Italy’s death toll increased by another 600 overnight.
- Spain reports 6,600 new cases and over 500 deaths.
- Indonesia reports 107 new deaths.
- London begins tightened lockdown.
- Thailand declares state of emergency.
- China to lift lockdown in Wuhan (after lifting it, putting back on several times).
TODAY’S POTENTIAL RATE VOLATILITY: HIGH
Rate volatility is high once again today, and it will be the case for the rest of the day. Markets are paying particularly close attention to the stimulus plan and, of course, the coronavirus developments.
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.