Rates Flat As The Services Side Of The US Economy Shows Improvement

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 -1 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

Trade Balance: The November Trade Balance fell to $-43.1B from October’s level of $-46.9B. The deficit is at the lowest level since 2017.

Services: ISM Non-Manufacturing PMI for December hit 55.0 vs. est. of 54.5. This represents more than 2/3 of our economic output. Any reading above 50.0 is expansionary. 55 is the best reading since August.

Factory Orders: November orders shrank by -0.7%, but that was better than market expectations of -0.8%.

Treasury Dump: We kick off three days of dumping our debt into the marketplace with our shorter-term 3-year note at 1:00 pm EST.

Eurozone: Retail Sales MOM 1.0% vs. est. of 0.6%/CPI Core YOY 1.3% vs. est. of 1.3%.

TODAY’S POTENTIAL RATE VOLATILITY: AVERAGE

The ISM Services numbers were rock-solid and would usually push rates higher and spike volatility. However, as we all know, the markets are very focused on the Iran turmoil. This is helping to push rates slightly lower, even in the face of good economic news.

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