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US economic growth hits a 2-year high

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: Higher

Mortgage rates are moving sideways so far today.  The MBS market worsened by -26 bps yesterday. This was enough to worsen mortgage rates or fees.   The market experienced high volatility yesterday.

Today’s Rate Forecast: Higher

GDP: We got the final reading for the 2nd QTR GDP, and it was revised upward to 3.1% vs est of 3.0%. Consumer Spending remained a very strong component at a 3.3% clip. This confirms that our economy had a good amount of momentum rolling into the 3rd QTR and that the 3rd QTR would likely be very strong except that the Hurricanes will drag on the data.

Jobs: Initial Weekly Jobless Claims hit 272K vs est of 270K and remains at very low levels despite companies having to shut down in Texas temporarily, FL and LA due to hurricanes. The closely watched 4-week moving average moved from 268,750 to 277,750.

Treasury Auction: Today we have our 7-year note at 1EST. This is generally not a factor for mortgage rates.

Fed: Today we hear from Esther George.

Today’s Potential Rate Volatility: Average

Yesterday we had a rather significant move higher in mortgage rates. Today we’re once again moving slightly higher, but with low volatility. With the tax proposal on the table and a solid GDP report, we’re looking for mortgage rates to slide higher with relatively modest volatility.

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.

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