Home Mortgage Alliance Corporation (HMAC)

Market volatility spikes on Chinese central bank policy changes

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Published Date 9/24/2024

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 today. The MBS market worsened by -4 bps yesterday. This was not enough to increase mortgage rates or fees. The market experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Housing: July Case Shiller Home Price Index (metro city) was up 5.92% on a YOY basis versus estimates of 5.80%. The July FHFA Housing Price Index showed a MOM gain of 0.1% versus estimates of 0.2%.

The Fed: Fed Governor Bowman (the first dissenting vote since 2005 from a Governor) said "I preferred a smaller initial cut in the policy rate while the U.S. economy remains strong and inflation remains a concern," and "I cannot rule out the risk that progress on inflation could continue to stall." She also said "The U.S. economy remains strong and core inflation remains uncomfortably above our 2% target."

Manufacturing: September Richmond Fed Manufacturing continued to contract with a -18 versus -17 reading.

The Consumer: After a shock to the upside last month, we got a complete reversal this month as Consumer Confidence tanked to 98.7(anything below 100 is bad) versus estimates of 103.3.

Treasury Auction: We kick off dumping our debt into the marketplace with today's 2 year Treasury note at 1 pm ET.

Central Banks: The Reserve Bank of Australia kept their key interest rate at 4.35%. For the second straight day, the People's Bank of China made market waves as they unleashed barrage of policy easing measures this morning, including a 20BPS primary policy rate cut, a 50BPS RRR cut and a 50BPS rate cut on existing mortgages.

Today's Potential Rate Volatility: Neutral

This morning markets dropped on the China news but have since recovered. Volatility started high but has already moderated.

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

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