Rates & Monthly Mortgage Payments Go Hand In Hand
Volume figures to be light on Wall Street today as traders get a head start on Labor Day weekend. It could make shopping for a mortgage a bona fide challenge.
Expect rate volatility this morning and afternoon and, therefore, by extension, expect wild swings in the Home Affordability Index.
As mortgage rates rise and fall, monthly mortgage payments do, too.
It Takes Two To Make A Deal
The relationship between “vacation days” and mortgage rate volatility stems from 2 facts — (1) Conforming mortgage rates are based on the price of mortgage-backed bonds, and (2) mortgage-backed bonds trade just like stocks. You can’t make a deal without matching a buyer and a seller at a specific price.
With so many traders on vacation today, therefore, there are fewer opportunities to match buyers and sellers. As a result, expect mortgage bond prices to rise and fall with more velocity than on a “normal” day — especially because the August jobs report was just released.
Rates Are Constantly Changing
So far this morning, mortgage rates have been jumpy and are higher versus Thursday’s close.
That said, mortgage pricing is fluid, changing every minute of every day. Today, expect those changes to be exaggerated. If you have a chance to lock a favorable rate, consider taking it because, before long, the rate could be gone.
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