Mortgage interest rates have caught a break an improved during the last two days of the week, following the release of a set of subpar domestic economic data. After an extensive period of weakness, mortgage bonds ended the week on a high note, as they had a nice rally on Thursday and Friday. Besides the fact, that weaker-than-expected readings on retail sales, industrial production and consumer confidence put a downward pressure on mortgage rates, the latest set of disappointing domestic economic data may also push the possibility of a June rate hike off the table. The Fed has repeatedly said, that the exact timing of a short-term interest rate hike depends on how strong the incoming economic data is.
Mortgage rates are in a precarious position right now. It may seem like the momentum and trends are shifting for interest rates, but the latest gains can evaporate anytime. Some of the lenders were in better shape on Friday, as they already revisited their rate sheets with lower rates, while otheres are expected to updated them on Monday morning.
This week’s economic calendar includes several key housing and manufacturing data. The first one in order is the National Association of Homebuilders Housing Market Index for May, which is set to be released on Monday. Back in April the NAHB’s Housing Market Index rose to a solid 56 from March’s 52, showing that builders are optimistic about the housing market. For this month’s figure the consensus expectation is an improvement, in the form of a reading of 57.
Next up is the Housing Starts and Building Permits report on Tuesday, a data which is a strong measure of economic growth. While in February housing starts fell to a 13-month low, the index bounced back by 2% in March. Still, that figure missed economists’ expectations. For April’s reading, experts had forecast a sharp increase (10%) in housing construction. Other analysts believe, that the recovery in housing starts will take more time and the improvement will be gradual.
On Wednesday, the Fed is going to publish the minutes of its April 29 meeting, which may provide us some clues, when the organization is likely to raise its benchmark interest rate. Most analysts, like former Fed Vice Chairman Donald Kohn, believe that a rate hike in June is highly unlikely. The minutes may provide some information whether the Fed targets an interest rate hike sometime between September and December or even later.
The National Association of Realtors is going to release April’s Existing Home Sales report on Thursday. In March, existing home sales surged 6.1% to an annual rate of 5.19 million. This is an encouraging sign for the housing market. Economists expect further improvement for this month’s reading, but a more modest one (0.6% increase) compared to March’s data.
On Thursday, Markit Economics will come out with its key manufacturing activity report, the Markit Flash U.S. Manufacturing PMI for May. This month’s reading is expected to come in at 54.5 a slight improvement over April’s figure (54.1)
Another manufacturing report that will see the light of day on Thursday is the Philadelphia Federal Reserve Manufacturing Index for May. Analysts are expecting that the Philly Fed’s manufacturing report will show an increase to 8 for May, compared to April’s reading of 7.5.
Lastly, the Labor Department’s upcoming Consumer Price Index for April, is expected to reveal a 0.1% month-over-month uptick. On the other hand, the headline inflation could decline to 0.2% from the prior year, according to economists’ forecast. However, the core inflation, which doesn’t include volatile food and energy categories, is expected to rise 0.2% in April. In case we see some stronger inflation figures for April, that could give the U.S. central bank more confidence to hike rates earlier than later.
With regards to mortgage interest rates this weekend, the 30-year home purchase loan at Bank of America (NYSE:BAC) is available at a rate of 3.750%, Looking at the 15-year fixed home loan option, it can be locked in at a rate of 2.875%. Bofa’s fixed-rate home refinancing options include the standard 30-year mortgage loan, which currently carries 3.875% interest cost. The 15-year fixed-rate home refinance loan can be secured for as low as 3.000%.
Over at Wells Fargo (NYSE:WFC), the 30-year conventional mortgage loan, which can be used for home purchase, is coming out at 4.000%. Borrowers, who believe the 15-year FRM is a more suitable alternative, will see these type of loans plans starting at 3.250%. Under its refinance loan portfolio, the California-based lender offers the 30-year refinance loan at a rate of 4.125% as of today. The 15-year version of this type of fixed-rate mortgage is up for grabs at a rate of 3.375%.
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.