Mortgage rates inched lower on Wednesday, as the bond market rallied following the release of the Fed’s policy statement. In the morning bonds had posted some big losses, and many lenders revised their rate sheets with higher rates compared to yesterday’s levels. However, later during the day the Fed released its statement, buyers stepped in, and the bond market bounced back. Eventually pricing on bonds improved and as a result mortgage interest rates swung slightly lower. At the majority of lenders, you may see improvements in the form of lower closings costs on Wednesday.
As expected, the Fed didn’t lift its benchmark fund rate on the June FOMC meeting. Federal Reserve Chair Janet Yellen said on Wednesday, that the U.S. central bank remains on track to raise rates until the end of the year. On the other hand, the Fed Chair noted, that any lift in short-term interest rates too soon, could pose a threat to the current pace of economic recovery. Although, the U.S. central bank didn’t reveal when its’s planning to raise its benchmark rate for the first time since 2006, Fed members said that they expect to take action this year. Fed officials reiterated that the exact timing of a rate hike will depend on the economy’s peformance in the coming months.
It looks like that financial markets were content with the Fed statement, thus bond markets enjoyed a slightly rally. Besides the policy decision statement, the U.S. central bank also released its forecast on the economic outlook. The so-called „dot plot” gives an insight how Fed members think about economic and monetary conditions in the near future. The latest dot plot projections indicate that the Fends fund rate could tick up to 0.625% by the end of 2015 and to 3.75% in the longer run. 15 out of 17 Fed officials predict a rate hike before 2016, but none of them expect rates to hit 1% until the end of the year. However, Fed members are divided on the pace of interest rate hike beyond 2016, which suggests that the U.S. central bank may eventually raise rates more slowly than analysts and investors had been expecting. The majority of analysts still believe that the initial rate hike will take place in September.
Yields on shorter-term treasury bonds fell following the release of the Fed’s statement. The yield on the 2-year treasury note dipped to 0.661% during late afternoong trading, compared with Tuesday’s 0.689% level. With regards to the benchmark 10-year treasury note, the yield on this type of government bond headed lower to 2.306% during the afternoon trading session, a slight downtick compared with 2.315% on Tuesday.
In other news, financial company HSH.com’s latest mortgage market report revealed that the average interest rate on the conforming 30-year fixed mortgage headed higher by 3 basis points to 4.11% during the Wednesday-to-Tuesday wraparound week. According to the company’s Weekly Mortgage Rates Radar the average rate on the conforming 5/1 Hybrid ARM advanced by 2 basis points 3.08% in the said period.
Last week, mortgage-finance company Freddie Mac reported that the average U.S. rate on the 30-year fixed mortgage jumped to 4.04% compared with 3.87% in the prior week. This marks the first time that the national average rate on the 30-year FRM exceeded the 4% threshold since last November, when it was hovering at 4.02%. The average rate on the 15-year fixed mortgage rose sharply as well, coming in at 3.25%, which translates to a 17 basis points increase compared with data from a week earlier.
Today’s economic calendar hasn’t included any significant reports, but tomorrow we will get some new data in the form of weekley jobless claims, the Consumer Price Index for May and the Philly Fed’s Manufacturing Index for June. Depending on the outcome, all these reports have the potential to impact bond markets and eventually mortgage interest rates, so we should keep an eye on tomorrow’s domestic economic data.
As far as today’s mortgage rates are concerned, major lenders, including Wells Fargo (NYSE:WFC), Citi Mortgage (NYSE:C) and Quicken Loans updated their loan information. At Wells Fargo, the 30-year fixed home refinance loan is coming out at a rate of 4.375% as of Wednesday. The lender’s 15-year home refi mortgage is published at a rate of 3.500%.
Under Citi Mortgage’s home refinance loan program, the 30-year fixed loan plans could see balances cleared at a rate of 4.000%. Borrowers, who are interested in shorter-term refinancing options, may want to take a look at the 15-year FRM, as it can be secured at a rate of 3.375%.
Moving on to Quicken Loans, the standard 30-year fixed mortgage loan, for home refinancing purposes, is available at a rate of 4.05%, according to the latest data. Those leaning toward the 15-year FRM, can expect to pay 3.125% interest cost.
The above mentioned interest rates are subject to change and are not guaranteed. In order to search for live mortgage rate quotes from some of the top U.S. lenders, please click on the link below. To calculate your monthly mortgage payment, feel free to use our featured mortgage calculator.