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Rates flat as ADP private payrolls blow past expectations

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 moved sideways today.  The MBS market improved by +17 bps yesterday. This may’ve been enough to improve mortgage rates or fees.   The rates experienced low volatility yesterday.

Today’s/Next Week Rate Forecast: Neutral

Crack in Tariffs: The Wall Street Journal reported that Richard Grenell, the U.S. ambassador to Germany, has been in talks recently with the chief executives of German car makers BMW, Volkswagen and Daimler, where they pitched the idea of ending car tariffs between the U.S. and the EU. During these talks, the executives said they would be in favor of scrapping these levies as part of a broader deal encompassing industrial goods, the Journal said. Europe has a $44B surplus in exported autos to the US.

Oil: OPEC was expected to increase output by 1 million barrels a day; OPEC ministers agreed to a deal on Friday to boost oil output by about 600,000 barrels a day, moving more modestly than expected to curb higher oil prices. The effect today drove crude oil prices up $3.16.

Next Week: Monday, May new home sales. Tuesday, Case/Shiller April home price index, June consumer confidence index from the Conference Board, 2 yr note auction. Wednesday, weekly MBA mortgage apps; May durable goods orders, May NAR pending home sales, May retail and wholesale inventories (advance), 5 yr note auction. Thursday, Q1 preliminary GDP (2nd look), weekly claims, 7 yr note auction. Friday, May personal income and spending and the Fed’s PCE inflation reading, Final U. of Michigan consumer sentiment index, June Chicago purchasing mgrs. index.

Rate Volatility: Low

Mortgage rates were not likely to make a big move today. However, next week could be a different story with all of the economic data being released and the continuing tariff saga.

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