Mortgage rates continued their upward movement on Tuesday, following the release of an exceptionally strong housing market data. Today’s housing report had a significant impact on the bond market, leading to a sell-off earlier in the trading session. Housing starts surged 20.2% to a seasonally adjusted annual rate of 1.14 million in April, which is the biggest monthly percentage gain and the highest level in nearly seven-and-a-half years, the Commerce Department reported on Tuesday. The majority of economists had forecast an increase of 10% for April’s reading. The current data signals a positive change in the housing industry, compared to March’s upwardly revised 944,000 figure.
New building permits, which indicate future demand, soared as well, coming in at a 1.14 million annualized rate, compared to the projected 1.06 million pace. Following the release of the stronger-than-expected housing figures, pricing on government bonds fell, eventually driving yields higher. The 10-year treasury note peaked at 2.296%. The yield on the 30-year treasury note jumped as well, finishing at 3.092%.
As we mentioned before, a number of factors impact mortgage rates and one of them is domestic economic data. April’s housing starts data signals a rebound in the sector. The positive data has put a significant pressure on mortgage bonds and eventually on interest rates, which is why you may see higher rates today at your favourite lender.
To put it simply, it’s difficult to predict where mortgage rates will go from here, even in short-term. The trends in the last few weeks suggest that more volatility is on the way and that rates may move closer and closer to 4%. Although, historically rates are still in an extremely good territory, if you are averse to risk, you may want to lock these days instead of floating. Otherwise, if you can handle risk and believe that economic slowdown is more likely going forward, than you may want to float in hope that mortgage rates will improve.
While the last few weeks have seen the release of a set of weak economic data, which have raised doubts among economists that the Federal Reserve will increase short-term interest rates before the year is over, today’s strong housing starts figure could prompt the U.S. central bank to hike rates earlier. Although, some of the voting members of the Fed had expressed a more dovish tone in recent weeks, amid a flow of weak economic reports, it will be interesting to see the outcome of the Fed’s minutes from its April 29 meeting. The FOMC minutes, which is going to be released on Wednesday afternoon, can easily become a market moving event. If clues from the minutes indicate a rate hike earlier than expected, it will impact mortgage rates badly. On the other hand, if the minutes point to a later date for tightening, interest rates could benefit.
Moving forward, on Thursday we will get another set of influential housing and manufacturing data, in the form of the Philadelphia Federal Reserve Manufacturing Survey for May, Existing Home Sales for April and the Markit Flash PMI for May. On top of these, the weekly jobless claims report is also set to be published on Thursday.
According to Zillow’s latest mortgage rate ticker, the interest rate on the 30-year fixed mortgage slipped to 3.77% this week, an improvement of 5 basis points compared to the prior week’s data. As per the company’s findings, the 30-year fixed mortgage in California came in at a rate of 3.77% during the week, a lowe rate compared to last week’s 3.86%. In Florida, the same type of home loan was quoted at 3.81%, a downtick of 7 basis points compared to data from a week earlier.
As far as today’s mortgage rates are concerned, the 30-year fixed home refinance loan is available at Bank of America (NYSE:BAC) at a rate of 4.000%, according to the updated loan information. The shorter-term, fixed-rate 15-year home refinance loan demands 3.000% interest. Home-buyers, who are looking for a new mortgage may want to take a look at BofA’s standard 30-year FRM, which is published at a rate of 3.750% on Tuesday. The lender’s 15-year conventional home loan is up for grabs at a rate of 2.875%.
U.S. Bank (NYSE:USB) offers an exstensive range of conventional and non-conventional home loans for borrowers, including the long-term 30-year fixed mortgage, which can be secured today for as low as 4.125%. Mortgage shoppers, who prefer to take on the 15-year version of this fixed-rate mortgage, will see the interest rate coming out at 3.375%.
Another major mortgage loan provider, Citi Mortgage (NYSE:C) advertises the standard 30-year conventional loan for home purchase at a rate of 3.750% on Tuesday. In case of the lender’s 15-year FRM, it can be locked in at a rate of 3.000%, according to the latest mortgage information. Under Citi Mortgage’s refinance loan portfolio, the 30-year fixed refi mortgage could see balances cleared at a rate of 4.000%. Today, the popular 15-year refi loan option starts at a rate of 3.250% at this lender.
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.