Current Mortgage Rates Roundup for February 28, 2017

Mortgage rates edged higher in the beginning of the week, as demand for safe haven assets, such as mortgage-backed securities (MBS), declined, ahead of President Trump’s speech before the Congress. Current borrowing costs are slightly higher this Tuesday morning, compared with interest rates on Friday, but the difference can be seen mostly in upfront costs, instead of contract rates. The average lender is offering 30-year fixed mortgage loans in the range of 4.0% – 4.250%, with the most prevalently quoted interest rate being 4.125%, as of this writing.

In the secondary market, the benchmark 10-year treasury note finished Tuesday’s trading day at a yield of 2.36%, an uptick of 5 basis points compared to data from Monday. As mortgage interest rates usually trail behind the 10-year treasury note, borrowers may notice a slight change in today’s mortgage rates compared to rates from a day earlier. Yields on other long-duration treasury bonds, such as the the 30-year note, increased as well. The aforementioned treasury bond closed yesterday’s trading session at a yield of 2.98%, advancing from the previous 2.95%.

today's mortgage rates february 28, 2017

MBS pricing is flat this Tuesday morning, so we have yet to see if mortgage rates are able to recover some of yesterday’s losses or the weakness continues. However, President Trump’s key speech before the Congress, which is today’s big ticket event, has the potential to shake up markets. Market participants are eagerly waiting for some time now to get specifics on Trump’s economic policies, and they are beginning to get impatient. The Wall Street’s expactations are very high for today’s speech. If Trump clearly outlines some of his economic plans, such as the „phehomenal” tax reform package and/or details on infrastructure spending, that could send mortgage interest rates higher. However, if Trump’s speech doesn’t meet market expectations, and he remains mum on upcoming economic policies, mortgage rates will likely fall.

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Odds for a rate hike in March have been rising since the beginning of the week. According to the CME Group’s FedWatch tool, which is used by investor and traders to predict future monetary policy, currently the market is pricing in a 35.4% chance for a rate increase at the next FOMC meeting in March. That’s up from the previous 31% probability on Monday. The rise in probability of a monetary tightening came after Dallas Fed chief Robert Kaplan’s hawkish comments on Monday, as he told reporters that a rate increase might take place in the near future. Speaking at an event in Oklahoma, Kaplan, who is a voting member on the Fed’s policy-setting committee this year, told journalists, that the U.S. central bank should raise rates „sooner rather than later means in the near future,”. At the same time, Kaplan didn’t specify when exactly the Fed should raise rates.

With regards to the latest domestic ecomomic data, three pieces of meaningful economic reports got released on Monday, in the form of January’s durable goods orders, pending home sales for January and the Dallas Fed manufacturing survey for February. According to a fresh data from the Commerce Department, U.S. durable goods orders increased 1.8% last month, after two straight months of declines. The increase in orders was driven by a big demand for commercial and military aircrafts. However, when transporation taken out of the equation, orders fell 0.2% in January, the weakest figure since June.

The National Association of Realtors’ pending home sales index fell 2.8% to 106.4 in January from an upwardly revised 109.5 in Decemer 2016, according to official data released Monday. Higher mortgage rates and a significant shortage of home listings were the main reasons behind last month’s decline in home sales.

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Another economic report came out on Monday, in the form of the Dallas Fed manufacturing survey for February. The index showed that manufacturing activity in the Dallas region surged to 24.5 in February, an improvement over the previous 22.1 figure a month earlier. This marks the highest reading for over 10 years. Economists had projected a reading of 19.4 for February’s manufacturing activity index.

Now, moving on to today’s economic calendar, the latest S&P/Case-Shiller U.S. National Home Price Index got released earlier this Tuesday. U.S. home price growth continued to increase in December, hitting a two-and-a-half year high. According to the index, home prices rose 5.8% in December year-over-year, up from the previous 5.6% increase in November. The 20-city composite index showed a similar trend, as home price growth accelerated in December compared to November’s reading. The 20-city composite index increased 5.6% in the three-month period ending in December compared to data from a year earlier, the latest data from S&P Dow Jones Indices revealed. The report signals that the housing market continued to gain momentum in the final months of 2016.

Other economic reports slated for release later today include fresh readings on Chicago PMI, Richmond Fed manufacturing survey, consumer confidence, as well as the second revision to Q1 GDP.

Furthermore, we will get some more Fedspeak this Tuesday. The list of central bankers scheduled to speak today includes Kansas City Fed chief Esther George, Philadelphia Fed President Patrick Harker, San Francisco Fed President John Williams and St. Louis Fed chief James Bullard.

Low mortgage rates are facing a possible danger this week. There are two big ticket events (Trump’s big speech to Congress tonight and Fed Chairwoman Janet Yellen’s speech in Chicago on Friday) this week, that could easily move markets, influence investors and traders, and has the potential to change the direction of where mortgage rates are heading.