If you’re in the market for a mortgage, you may want to keep an eye on the latest news about mortgage rates. This week, rates are expected to be choppy due to outside influences that could impact sentiment, and ultimately, rates. Here are the three key factors to watch:

1. Banking drama: Recent concerns about the stability of the banking system at home and abroad have fueled a flight to quality in bonds, which has led to lower mortgage rates. If there is any fresh banking drama this week, it could cause rates to move again.
2. The Fed: The Federal Reserve is trying to manage several economic factors at once, including inflation, a potential recession, and the path of Fed rate hikes. Any speeches or actions from the Fed this week could impact sentiment and ultimately, rates.
3. Inflation data: The Fed’s key measure of inflation, Core PCE, will be released on Friday. Depending on how the data comes in, it could be used to justify either a pause in rate hikes or an increase in rates as soon as May.

Last week, the MBS market improved by +32 bps, which led to lower mortgage rates. However, the market also experienced high volatility due to shifting sentiment about Fed rate hikes. On Friday, sentiment was that the Fed would have to pause and we would see rate cuts by June, which led to better rates. However, sentiment has shifted again, and now the market is looking for a possible rate hike in May and no cuts until July.

Overall, the advice for those in the market for a mortgage is to cautiously float and see how the day goes. While there is still hope that rates will fall, it will depend on outside influences that cause concern to the markets and not anything we can readily count on. Keep an eye on the three key factors above, as they have the greatest ability to impact rates this week.

Technicals:

The UMBS 5.5 coupon, which represents mortgage backed securities, ended Monday at 100.24, down -15bps on the day and well off the 101.17 they ended with on Friday. The technical resistance level of the 200-day moving average was 101.15 on Friday, and it looked like we may see more improvement this week, but that idea is now being questioned.

Meanwhile, the 10yr Treasury yield closed at 3.53, significantly higher than the 3.38 level seen on Friday. The 3.40 level will be an important level to watch to see if it can break below again, along with the 200-day moving average at 3.39.

These changes in mortgage backed securities and Treasury yields are important because they can impact mortgage rates for consumers. Higher yields can lead to higher mortgage rates, while lower yields can lead to lower mortgage rates.

Overall, it’s important to keep an eye on these market indicators and be aware of any significant movements. If you’re in the market for a mortgage, it may be a good idea to talk to a trusted lender to discuss your options and lock in a rate if you feel comfortable with the current market conditions.