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HOUSING STARTS DROP IN APRIL BUT CONTINUES TO SHOW STRENGTH

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 -11  bps yesterday. This caused rates or fees to mostly move sideways for the day. The rates experienced moderate to low volatility yesterday.

TODAY’S RATE FORECAST: NEUTRAL

Housing: April Housing Starts were lighter than expected (1.569M vs. est. of 1.71M), but Building Permits were in line with expectations (1.76M vs. est. of 1.77M). March starts and permits revised lower, but not much. The current level of starts is 67.3% above the same month a year earlier when construction activity plunged amid the pandemic-induced shutdowns. Residential permits, which can be a bellwether for future home construction, increased 0.3% in April at a seasonally adjusted annual rate of 1.76 million. Overall, construction declined in the Midwest and the South, while it rose in the Northeast and the West.

Central Bank: We hear from ECB President LaGarde and Bank of England Governor Bailey today, as well as our own Fed’s Bostic and Kaplan.

TODAY’S POTENTIAL RATE VOLATILITY: LOW

Rate markets are likely to move sideways today on low volatility. There’s no economic news that can move rate markets today. It will be interesting to hear from the ECB and the Bank of England, but it’s doubtful it will  move rates.

BOTTOM LINE:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact Ken at Mortgage-Boss to discuss it with him.

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