Mortgage rates tread water as inflation threatens to sink the boat 🚢🪨⌛
Midweek Market Update
Included in this update are the following sections:
MIDWEEK RECAP ⏪
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Nothing has happened so far in the short President’s day week.
The good news is the boring sideways grind has kept mortgage rates near a multi-year low.
See more in the Rate Price Index section below.
IMPACT CALENDAR 📅
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Don’t expect much action on Thursday either as bond markets seem content treading water until Friday’s PCE report.
Personal Consumption Expenditures is the Fed’s preferred inflation metric and is bookended on Friday by the final Q4 GDP numbers and the University of Michigan final consumer sentiment reading for February.
RATE PRICE INDEX 📉
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Mortgage rates do not rise or fall, instead the PRICE of rates change.
The LendZen Index calculates a daily change in the price of mortgage rates by tracking a spectrum of mortgage-backed securities (MBS).
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24-Hour: -1 bps (-$9 per $100K)
5-Day: -24 bps (-$240)
10-Day: -50 bps (-$499)
30-Day: -10 bps (-$90)
Learn more about the LendZen Index and explore the full data series at LendZen.substack.com
MORTGAGE SPREADS 🧈
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Published daily with the LendZen Index is the LendZen Mortgage-Treasury Spread.
The LMTS uses actual bond yields to create a historically consistent, and reliable, data set.
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Feb 11: 0.82
Feb 18: 0.83
24h: -1 bps
5d: +1 bps
12m Avg: 1.16
YoY: -43 bps
Learn more about the importance of accurate mortgage spreads on this Substack post.
The spread between MBS yields and the 10-Treasury Note continues to hover at multi-year lows.
RATE LOCK GUIDE 🔒
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The LendZen LOCK-O-METER provides borrowers with a risk-weighted score based on how various macroeconomic events, including market data, central bank announcements, and geopolitics, each historically impacts the price of bonds.
higher risk scores = lean towards locking
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Closing Window
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[ 15 Days ] — 82 🔴
A quiet start to the week has eased immediate lock pressure, but with rates sitting at the doorstep of a multi-year best, PCE, GDP, and Consumer Sentiment still make locking the prudent move for short timelines.
[ 30 Days ] — 61 🟠
The recent calm and positive bond momentum helps the case for floating, but inflation remains a threat that could undo recent gains.
[ 45 Days ] — 54 🟡
With more time to absorb near-term volatility this window suggests patience will prevail, especially if Friday’s inflation data cooperates.
[ 60 Days ] — 38 🟢
The broader trend remains bond friendly. As long as inflation stays contained, floating continues to make sense heading toward March and the next FOMC rate decision.
Thanks for reading.
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