Rate Markets Moving Lower As Coronavirus Concerns Spike

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 slightly lower so far today.  The MBS market improved by +18 bps yesterday. This caused rates or fees to move lower for the day. The rates experienced moderate volatility yesterday.

TODAY’S RATE FORECAST: LOWER

Housing: December YOY Case Shiller 20 Metro City Home Price Index up 2.9% vs. est. of 2.8%. December FHFA MOM Housing Price Index up 0.6% vs. est. of 0.3%.

Manufacturing: February Richmond Fed Manufacturing Index -2 vs. est. of 13.

Consumer Confidence: The Conference Board’s February survey came in at 130.7 vs. est. of 132.5.

Treasury Dump: We kick off three straight days of dumping our debt into the market place with our shorter-term 2-year note.

Coronavirus: Here are the most recent headlines about the Cov-19 virus:

• Proctor and Gamble says over 17,000 products could see supply chain disruptions.
• Marc Lipsitch, Harvard epidemiology professor, says that the coronavirus is not containable and that 40-70 percent of people worldwide will likely be infected.
• Iranian Deputy Health Minister is infected with coronavirus.
• South Korean Crisis-Response Coordinator commits suicide as cases near 1,000, deaths hit 11, locks down the city of 2.5 million.
• Over 8,000 Californians are under “self-imposed quarantine.”
• European spread continues with Croatia, Austria, and Switzerland joining the list of confirmed cases.

TODAY’S POTENTIAL RATE VOLATILITY: HIGH

Rate markets are getting concerned that the coronavirus will get out of hand. As a result, rates are trailing lower, and volatility is pushing higher. Look for this trend to continue until markets get a grip on how this is going to play out. Current economic releases mean very little in this environment.

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