Lots at Stake For Interest Rates This Week

(76) 10/31/23 Mortgage Rate and Housing Update – YouTube


Interest rates stayed pretty tame this week.

The Mortgage Backed Security (MBS) market traded up + 6 bps on the week and mortgage interest rates stayed relatively the same.

This week has a bunch of events that could move the market.

On Wednesday, the FED will hold a press conference and announce if they will raise the Federal Funds Rate.

Almost everyone is predicting another pause, but as we saw last time – the statement and press conference on what’s ahead in the future is just as important to the market.

Perhaps of more importance is the US Treasury’s Borrowing Needs. 

On Monday, the US Treasury announced that they will borrow $776 Billion in Quarter 4

and $816 Billion Quarter 1 of 2024.

On Wednesday, the Treasury will announce the size of these auctions, the duration being issued, and their timing. 

The U.S. Government is borrowing at a time when the economy has robust growth and unemployment is low which should translate into more revenue and less borrowing.

The U.S. ran a $1.7 Trillion deficit from October 2022 to September 2023.

According to Amerivet’s Faranello – “We are running outsized deficits for an economy at full employment.”

On top of the massive borrowing, rates for borrowing are very high and could go higher.

There is concern that there won’t be enough demand for Government bonds which would push up yields/rates for the bonds higher (mortgage rates would likely follow).

Below is an excerpt from a great article on this subject from Morningstar you can find here: 


“Fiscal spending has gotten out of hand and is not sustainable, especially now with higher interest rates and the additional cost of interest to pay for those large deficits,”

said Sterner of Apollon Wealth Management, which manages $5.3 billion from Mount Pleasant, S.C.

“With the economy growing and unemployment near historic lows, this is a time when we should be cutting deficits, but instead we are adding to it,” Sterner said via phone.

“If the economy potentially slips into a recession next year, the Fed and the government aren’t going to be in a position to provide stimulus or cut rates as they have in the past due to these large deficits and stubborn inflation.

It’s concerning that the deficit is growing in a higher interest-rate environment, and also at a time when we are trying to fund two wars [in Ukraine and the Middle East] with no end in sight.”

We also have the BLS Jobs Report for October on Friday.

Last month, job creation blew out estimates which isn’t good for mortgage interest rates.

Average interest rates in the U.S. according to Mortgage News Daily as of 10/30 is 7.92%.

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.