TABLE OF CONTENTS
RATE RECAP ⏪
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Aside from a brief reprieve in April, following the signing of the “Memorandum of Understanding”, mortgage rate pricing has deteriorated almost continuously since the war in Iran began on February 27.
Any hope of a near-term reversal taking shape was violently crushed in September.
MBS are now within reach of the 2023 lows, which means mortgage rate pricing is back near multi-decade highs.
This month’s Price Tracker includes a quarterly comparison showing how dramatically pricing has changed over the last 12 months.
The horizontal bar charts show the exact price of each note rate at the end of the date listed.
The rate price tables and MBS data cover the previous reporting period only (AUG 28 – OCT 2).
PRICE TRACKER 🔭
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Most mortgages are sold into mortgage-backed securities (MBS) and the price of these bonds determines rates for all banks and lenders.
However, mortgage rates DO NOT rise or fall. Instead, the price of each rate changes while the rates available to you remain the same.
The Mortgage Rate Price Tracker (MRPT) illustrates this dynamic by showing how the price of each rate changed within the time series.
Some higher rates pay a rebate; this is illustrated on the tracker with negative (-) points.
When the “total change” in the table is negative it means a reduction in the price of the rate.
The MRPT is a “rate and loan program” specific example of the LendZen Index, which monitors a much broader set of rates and mortgage bond coupons.
Both are effective for visualizing how the PRICE of mortgage rates has changed, while the LendZen Index is published daily at LendZen.Substack.com
CONVENTIONAL 30-YEAR 📉
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CONVENTIONAL 15-YEAR 📉
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VA 30-YEAR 📉
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MBS EXPLAINED 📖
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How much a mortgage-backed security is priced below or above par (100-00) determines the “price” of the mortgage rates packaged into that MBS coupon.
For example, the higher an MBS is priced above par, the less expensive the rates will be that are sold into that security.
(ex. 102-00 > 101-00)
The Note rates of each mortgage sold into a specific MBS typically range between 0.250 – 0.625 above the coupon rate, depending on the loan type.
(ex. 6.250% – 6.625% rates ~ 6.00 MBS)
The spread between the mortgage Note rate and the coupon rate is retained as a servicing fee.
(ex. 0.250 – 0.625)
This is why a 6.00 note rate is not sold into a 6.00 coupon and is therefore priced based on lower coupons.
(ex. 6.00% rate ~ 5.50 MBS)
As a result, the shift between different coupons can disproportionality affect the PRICE of the lower Note rate despite the close proximity of the two rates.
(ex. X.00% rate vs X.25% rate)
Thanks for reading…
If you want to shop real-time mortgage rates and get instant qualification results without providing any contact information visit LendZen.com
The below snapshot is just a glimpse of today’s rates, but the pricing you see is exactly what you get - there are no additional lender fees or origination charges.
LendZen Inc. is an equal opportunity mortgage lender, NMLS 375788