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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 are moving sideways so far today.  The MBS market worsened by -22 bps yesterday. This was enough to worsen rates. The rates experienced high volatility yesterday.

Today’s Rate Forecast: Neutral

Durable Goods Orders: The preliminary (often revised significantly) February data was a mixed bag with the headline data beating estimates (-1.6% vs est of -1.8%) and Ex-Transportation just missing estimates (0.1% vs est of 0.2%).

Brexit: The soap opera continues to provide excellent entertainment as PM Theresa May wants to give the EU a final “ultimatum” to the European Union to make some changes to the deal including the Irish Backstop which is hotly contested by Great Brittan. Meanwhile, her attempts to bring the deal to the floor for yet a fourth vote is not looking good as Speaker Bercow is providing resistance.

Australia: The Reserve Bank of Australia kept its key interest rate at 1.5%

Eurozone: PPI YOY 3.0% vs est of 3.1%

Today’s Potential Rate Volatility: Low

Mortgage rates have started to stabilize today after heading in the wrong direction for the last couple of days. Yesterday was full of economic news that helped push rates higher. Today, nothing due out that can push rates significantly higher or lower. Look for rates to trade fairly flat today on relatively low volatility. Of course, anything unexpected on trade or Brexit could change all of that.

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