Mortgage rates were flat on Tuesday, following slight weakness in the bond market. Although, pricing on treasury bonds headed slightly lower, the change was so minor that it didn’t have much influence on mortgage pricing. Current mortgage rates are pretty much in line with those seen a day earlier. According to the latest mortgage information, the most prevalently quoted rate on the 30-year fixed conventional mortgage remans at 4.250%. Some of the more aggressive lenders are offering the 30-year FRM for as low as 4.125%, while others are quoting it as high as 4.375% these days.
As mentioned above, treasuries were slightly weaker on Tuesday, with the benchmark 10-year treasury yield closing the trading day at 2.43%. That’s a 1 basis point uptick compared to data from a day earlier. The bond market is a driving force behind mortgage rates and the 10-year treasury note has a strong correlation with interest rates. When the yield on the 10-year treasury drops, mortgage rates are often trending lower as well. On the other hand, when the 10-year treasury yield ticks up, mortgage interest rates usually increase. The long-term 30-year treasury bond finished Tuesday’s trading session at a yield of 3.04%, 1 basis point higher than a day earlier.
Mortgage-backed securities (MBS), which are bonds that lenders are monitoring to determine daily mortgage rates, are in a good shape this Wednesday morning, ahead of the release of the FOMC Minutes. The U.S. central bank will release the Minutes from its latest, February gathering later today. As the release of the FOMC Minutes is dubbed as the week’s big ticket event, it has the potential to move markets and mortgage rates as well.
On Tuesday, several U.S. policymakers were scheduled to speak about monetary policy. Comments from Philadelphia Fed chief Patrick Harker suggests, that a rate hike at the upcoming FOMC meeting in March is a live option. Harker, who is a voting member of the FOMC this year, told reporters that „Seeing any data that is not consistent with what I see as continued growth in the economy. We’ll see. But I don’t think March should be taken off the table at this point.”
According to Minneapolis Fed President, Neel Kashkari, the labor market has „more room to run”, suggesting that he believes the U.S. central bank should hold off raising rates. When asked when he thinks the Fed should tighten monetary policy, Kashkari, who is a voting member of the Fed’s policy-setting panel in 2017, declined to comment.
San Francisco Fed President John Williams believes the U.S. economy is „essentially at full strength.” In an economic letter published on Tuesday, Williams said that historically low interest rates will likely persist, which could hurt global economic stability.
As far as today’s economic data is concerned, the National Association of Realtors released January’s existing home sales data. The latest data from the NAR showed, that existing home sales surged to a 10-year high in January, amid rising home prices and mortgage rates, signaling a growing confidence in the economy. Existing home sales advanced 3.3 percent to a seasonally adjusted annual rate of 5.69 million units last month, the highest reading since February 2007. Economists had projected sales rising 1.1% to a seasonally adjusted 5.54 million units, so the current reading is well-above expectations.
In other news, financial company, Zillow reported yesterday that 30-year fixed mortgage rates were essentially unchanged in the wraparound week ended Tuesday. According to the firm’s findings, the 30-year FRM averaged a rate of 3.93% at the end of the Wednesday-to-Tuesday wraparound week. On the other hand, the average interest rate on the 15-year fixed mortgage is currently hovering at 3.13%, while the 5/1 ARM is coming out at 2.96% at Zillow Mortgages.
A regional breakdown of current average mortgage rates reveals, that in California, the 30-year FRM was carrying a rate of 3.93% as of Tuesday, a decrease of 1 basis point compared to data from a week earlier. The biggest weekly increase in mortgage rates took place in Washington state, where the current average interest rate on the 30-year fixed mortgage is now coming out at 3.98%, up 5 basis points since last week. Zillow expects mortgage rates to be impacted by speeches from Fed officials this week, as well as Wednesday’s release of the FOMC Minutes.