Mortgage rates spiked on Tuesday, as weakness in the bond market continued for the second straight day, resulting in another selloff. U.S. treasury bond prices decreased sharply today, as reports surfaced that Greece’s creditors will present a proposal to the country’s officials at some point this week. Also, the Eurozone inflation data for May showed an increase, which ultimately hurt the European and U.S. bond markets. Moreover, stronger-than-expected U.S. economic data released on Monday bolstered speculation that the Fed may hike rates earlier this year, which put an upward pressure on treasury yields. All these news had an effect on today’s bond market trading, which ended in a selloff.
The yield on the benchmark 10-year treasury note soared by 7.6 basis points on Tuesday, to finish the trading day at 2.266%. The 30-year treasury note also ticked up during today’s trading session, eventually closing at 3.011%. As investors shifted to riskier assets, pricing on safer bonds, such as mortage-backed securities (MBS), which most directly influence interest rates, fell and consequently mortgage rates increased, to their highest levels of 2015.
Only one piece of economic data saw the light of day on Tuesday, which was the Factory Orders figures for April. It appears, that new orders for U.S. factory goods dropped last month 0.4%, following a 2.2% increase in March. Economists had forecast a contraction of 0.1% for April’s reading. While we consider this type of report a second-tier economic data, in normal circumstances, a weaker-than-expected number like this should help bond markets, and eventually mortgage rates, but it’s not the case today.
Tomorrow, the ADP Employment Report for May is set to be released. According to a recent survey by Reuters, economists had forecast that the report would show a gain of 200,000 jobs for May’s ADP employment data. Meanwhile, March’s private payroll numbers were revised down to 175,000 from the previously reported 189,000 jobs. The upcoming report could give us an insight on the current state of the labor market. If the data suggests that the job market is strengthening, it could lead to an uptick in mortgage rates. On the other hand, if the report contains some disappointing figures, mortgage interest rates could head lower.
The average 30-year fixed mortgage rate is currently hovering at 3.87%, according to mortgage-buyer, Freddie Mac’s latest weekly survey released last Thursday. This is the highest rate on record since the beginning of the week. In case markets are experiencing more weakness ahead of this week’s big ticket event, May’s Non-Farm Payrolls data, the current sub-4% rates could be at risk. And this also means, when the federal agency’s new survey comes out on Thursday, we could see higher average rates.
So far, this week doesn’t look very friendly to mortgage rates. Bonds have been selling off for two straight days and mortgage rates are on the upward path. And this week’s most important economic events are ahead of us. The upcoming ADP employment report on Wednesday, and the Non-Farm Payrolls data on Friday are expected to shake up markets. With that in mind, if you can’t tolerate risk, your best bet is to lock a rate ahead of the release of these job reports. However, if you can handle risk in hope for a big reward, you can float and see what happens to mortgage rates later this week.
In other news, the current mortgage rate on the 30-year FRM is 3.78% on Zillow Mortgages, according to the latest data from the company. While the interest rate hovered around 3.74% for most of the week, it rose to 3.78% at the end of the wraparound week. Compared to last week’s interest rate, the 30-year fixed loan improved by 4 basis points to 3.77% in California. Zillow’s data also revealed, that the biggest weekly change in mortgage rates was in New York, where the 30-year FRM edged up by 6 basis points to 3.87% this week.
Now, looking at current mortgage rate quotes at top U.S. lenders, Bank of America’s (NYSE:BAC) 30-year fixed home refinance mortgage is coming out at 4.000% on Tuesday. Borrowers, who are interested in locking the 15-year FRM for home refinance purposes, can expect to pay 3.000% interest cost.
There are plenty of refinancing options at another major lender, Wells Fargo (NYSE:WFC) as well, including the standard 30-year FRM, which can see balances cleared at 4.250%. Others, who are leaning toward the popular 15-year home refi mortgage, will see these type of loan plans starting at 3.500%, the latest mortgage information showed.
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.