Mortgage rates fell for the second straight day on Friday, as pricing on U.S. treasury bonds strengthened. After increasing for four consecutive days last week, mortgage rates managed to erase the losses, and currently they are in line with those levels seen a week earlier. The most prevalently quoted rate for the standard 30-year fixed mortgage remains at 4.250%, however, some lenders are still offering this type of loan for as low as 4.125% in certain scenarios. As financial markets, banks and most mortgage lenders are closed this Monday for the President Day holiday, current mortgage rates are expected to remain at attractive levels in the beginning of the new week.
Last Friday there were no significant big ticket events or market moving economic reports scheduled for release, yet treasury bonds posted some gains. The top-rated 10-year treasury note closed the trading session at a yield of 2.42%, down 3 basis points from a day earlier. Mortgage interest rates usually trail behind the 10-year note, so you may see some improvements in today’s mortgage rates at your lender. The longer-term, 30-yeart treasury bond rounded off the week on a positive note as well, with the yield coming out at 3.03%, a 2 basis points decline over the previous 3.05% a day earlier.
National mortgage rates are on a downward trajectory, according to federal agency, Freddie Mac. According to the results of the latest weekly Primary Mortgage Market Survey (PMMS) released Thursday, the 30-year fixed mortgage carried an average rate of 4.15% in the week ended Februarty 16, which translates to a 2 basis points improvement compared to the previous 4.17% in the prior week. Lenders were offering 15-year fixed mortgage loans at a lower average rate as well last week, Freddie Mac reported. The average interest rate on the aforementioned loan ticked down by 4 basis points to 3.35%. The housing giant’s survey also revealed, that on average the 5-year ARM was offered at a rate of 3.18% last week, a lower mortgage rate compared to 3.21% in the prior week.
The U.S. economic calendar in the week ahead is going to be light on influential data. However, the lack of market moving data doesn’t meant that mortgage rates will stay at current levels in the week ahead. News and headlines coming from the Trump administration, as well as economic headlines from the Eurozone can always the power to influence U.S. markets, and indirectly mortgage rates, in one way or another. In terms of domestic economic events, without a doubt, the highlight of the week will be the release of the Minutes from the Federal Reserve’s February meeting. Investors and traders will be eyeing the release of the Fed Minutes closely for any hints on the timing and pace of a possible interest rate hike.
While most economists don’t expect an interest rate increase in March, in her semi-annual testimony to the Senate Banking Committee Congress last week, Fed Chairwoman Janet Yellen said, that it would be „unwise” too wait too long to raise rates, as the labor market remains healthy and inflation stays on track. Currently, the market gives just 17% odds of a rate hike in March and a 47% probability in June, according to the Fed fund futures.
Last week was full of Fedspeak, and this week will be no different, as a number of top U.S. policymakers are set to make public appearances and share their views on monetary policy. The list of Fed officials scheduled to speak this week includes Neel Kashkari, Patrick Harker, John Williams, Jerome Powel, as well as Dennis Lockhart. It goes without saying that market participants will be watching these Fedspeaks closely for further clues on when the Fed is expecting to hike rates.
This week’s upcoming domestic economic data includes a fresh reading on PMI manufacturing index for February due Tuesday. We will also get some fresh housing market reports in the form of existing home sales for January due Wednesday, and new home sales for January due Thursday. It will be interesting to see the outcome of these housing market reports, in the light of a recent pickup in mortgage rates. Other economic reports slated for release this week include weekly jobless claims, Chicago Fed national activity index, FHFA house price index and a fresh reading on consumer sentiment.
Current mortgage rates are still near historic lows, but longer-term trends favor a move towards higher interest rates. Also, the Fed is expected to hike rates sometime in the coming months, which would most likely send mortgage rates higher. With that said, borrowers who are in the process of getting a mortgage, but want to avoid paying higher borrowing costs, may want to strike while the iron is hot.