Three things that could impact rates this week

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Published Date 1/2/2024

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 under pressure today. The MBS market improved by +14 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced low volatility last week.

This week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Jobs 2) The Fed and 3) ISMs.

1) Jobs: We will have huge amount of job and wage related data all week long culminating in Big Jobs Friday. The relative strength of the job market and wage pressures will have a big impact on pricing. This week we will get JOLTS, ADP, Challenger Job Cuts, Initial Claims, Non Farm Payrolls, Unemployment Rate, Average Hourly Earnings and more.

2) The Fed: We will get the Minutes from the last FOMC meeting on Wednesday.

3) ISMs: After weaker than expected manufacturing data last week (Chicago PMI/Richmond Fed MF), this week's ISM Manufacturing report will carry a lot of weight. But so to will the ISM Services report as the services sector is 2/3 of our economic engine.

This week's Potential Rate Volatility: High

This morning markets are under mild pressure. Volatility has started at moderate levels but will likely increase as the week goes on.

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

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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All rates, fees and programs are subject to change without notice.