Mortage Rates Throughout the Day
Posted by: Greg Fischer Post date: May 9th, 2011According to a recent survey of home buyers, 55% of them didn’t know that mortgage rates can change throughout the day. In fact they change exactly as often as market forces dictate. Sometimes that means that the first rate sheet of the day for each lender doesn’t change. Other times the price of a given rate changes several times during the day depending on market factors.
Mortgage rates are driven by mortgage backed securities (MBS) a commodity that is traded on Wall St. Like stocks and bonds, they are being bought, sold and traded all day long as part of the financial world. For any given rate, if the buying demand drives the price of the MBS up, rates improve. It’s simple supply and demand. Just like the evening news updates where the Dow and NASDAQ ended each day, they are moving thanks to buys and sells all day long.
If a given MBS price moves far enough up or down, it affects the pricing of mortgage rates. If the price of a given rate moves far enough up or down, it affects the rate available to you. That does not mean the the 4.5% rate available this morning is suddenly 5%, but movement of .125 or even .25 up or down has happened. For smaller changes, the 4.5% at zero points might well become 4.5% with half a point with little notice.
And these price changes affect all lenders within a very short time frame. Your insurance is to lock a rate in with the lender when you see the rate/price you’re comfortable with. Working with a lender who tracks MBS changes and can advise on better times to lock based on recent trends isn’t a bad idea either.
