Mortgage Interest Rates Forecast: When Should You Lock Your Rate?

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. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are trending slightly higher this morning. Last week the MBS market worsened by -95 bps. This was enough to worsen mortgage rates or fees. There was a good deal of rate volatility through the week.

This Week’s Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to move rates this week. 1) The Fed, 2) Domestic Flavor, and 3) Stimulus.

1 – The Fed: We have a busy week for Fed Speak with the release of the Beige Book and a speech by Fed Chair Powel. The bond market is acutely focused on any further discussion/direction on “taper talk” for the reduction in bond purchases by the Fed. Here is this week’s schedule:

  • 01/11 Bostic, Kaplan
  • 01/12 Bostic, Brainard, Kaplan, Mester and George
  • 01/13 Beige Book, Bullard, Brainard, Harker, and Clarida
  • 01/14 Powell, Bostic and Kaplan

2 –  Domestic: We have a big week for Economic Data. The releases that will get the most attention from bond traders are: CPI, Initial Weekly Jobless Claims, and Retail Sales.

3 – Stimulus: Now that much of the geopolitical uncertainty has been removed from bond prices, bond traders are focused on the timing and size of the next round of stimulus out of Congress which may include an additional round of direct checks to consumers.

Treasury Dump: We have a big week for dumping our debt into the marketplace, with Wednesday’s 30 year Treasury bond auction being the most important for our pricing.

  • 01/11 3 year note
  • 01/12 10 year note
  • 01/13 30 year bond
This Week’s Potential Volatility: High

For the first time in a long time, geopolitical events will not likely have an effect on rate markets. Rate markets will pay very close attention to the Fed and their view on tapering. There’ll be a lot of focus on additional stimulus talks as well.

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.

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.

INTENT AND CAPABILITIES DISCLAIMER SplitReady and SplitReady – Divorce Mortgage Pro is not a lending institution and does not extend credit. SplitReady and SpliReady – Divorce Mortgage Pro does not accept, process, underwrite or fund loans for any purpose. All content and services are of an educational, advisory and consultative nature and do not represent the products or capabilities of any specific institution.

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