Market Update: Rates, Housing, 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 at the moment. The MBS market worsened by -83 bps yesterday. This caused rates or fees to move higher.  Mortgage rates, like the overall market, continue to show extreme volatility.

TODAY’S RATE FORECAST: NEUTRAL

Housing: February existing home sales +6.5% to 5.77 mil the best in 13 yrs; that will be the last increase we see for months. The median existing-home price for all housing types in February was $270,100, up 8.0% from February 2019 ($250,100), as prices rose in every region. February’s price increase marks 96 straight months of year-over-year gains. Total housing inventory at the end of February totaled 1.47 million units, up 5.0% from January, but down 9.8% from one year ago (1.63 million). Unsold inventory sits at a 3.1-month supply at the current sales pace, equal to the supply recorded in January and down from the 3.6-month figure recorded in February 2019

Cornonavirus: These are the most recent headlines that the bond market is focused on this morning.

• California is on statewide lockdown as CA Governor issues “stay at home”order and says 56% of all residents will be infected.
• Hong Kong sees the highest daily surge in new cases since the outbreak began.
• Spain’s numbers jumped to 19,980 cases and 1,002 deaths
• US Cases now above 14,000, deaths above 200
• NY has the most amount of cases (5,711 vs CA 1,030). CA on lockdown but NY not yet – markets expect it though.
• IRS moves tax filing deadline to July 15
• Central Bank: The People’s Bank of China kept its key interest rate unchanged at 4.05%

TODAY’S POTENTIAL RATE VOLATILITY: HIGH

Once again yesterday and so far today, rate markets are incredibly volatile. While rates have moved higher at a breathtaking pace over the last week, we are seeing stocks trying to post the 2nd day of gains. Rate markets will be volatile through today and likely next week.

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