Mortgage rates sailed slightly lower in the beginning of the holiday-shortened week, as pricing on mortgage-backed securities (MBS) improved, which helped pushing interest rates to lower territories. While it might be too early to say, but today’s improvements could signal, that mortgage rates are attempting a bounce back, after a long run of increasing rates earlier in May. U.S. treasury bonds strengthened on Tuesday, due to renewed concerns that Greece might exit from the Eurozone. When pricing on bonds increase, their yields decline. The yield on the benchmark 10-year treasury note dipped 7.5 basis points to 2.135% on Tuesday. Even that the incoming economic data turned out stronger-than-expected, it wasn’t enough to counter the effects of the fear over Greece’s possible payment default. So today mortgage rates are improving, but it’s difficult to predict where they will be heading from here. Domestic economic data and the ongoing events in Europe remain two important factors that have influence on U.S. markets and eventually on mortgage rates.
Today’s domestic economic data suggest that the economic growth is slowly picking up. The Commerce Department reported earlier today, that total durable goods orders, which is a key data for business investment, dropped a seasonally adjusted 0.5% in April. We should note, that the decrease in last month’s orders was driven mainly by a drop-off in aircraft orders. The core reading, which excludes transportation orders, rose 0.5% last month.
Another fresh data released today by the Commerce Department suggests, that the recovery in the housing market is gaining momentum. New home sales increased by 6.8% to a seasonally adjusted annual rate of 517,000 units, compared to the consensus expectation of 509,000. Also, March’s data was revised up to 484,000 from the previously reported 481,000 units. This is the second positive housing market report this month, besides April’s housing starts data released last week. Analysts are hoping for a steady rebound in the housing market, that could drive the economic growth moving forward.
The Conference Board’s Consumer Confidence Index edged up to 95.4 in May, compared to April’s reading of 94.3. For this month’s data, the consensus expectation was for a reading of 95.0.
Manufacturing activity in the central Atlantic region remained soft this month, according to the Richmond Fed’s latest survey. May’s composite index came in at 1 compared to April’s reading of -3.
As we mentioned above, the majority of today’s economic data shows some positive signs for the economy, but these reports didn’t have a significant influence on mortgage rates afterall. You may not see too many changes in mortgage rates at the country’s top lenders this Tuesday, compared to rate levels on Friday, but you may experience lower closings costs at select lenders.
According to HSH.com’s latest Mortgage Rates Radar covering the Wednesday-to-Tuesday wraparound week, the average rate for the 30-year fixed conforming loan decreaed by 1 basis point to 3.96%. On the other hand, the average rate on the 5/1 Hybrid ARM rose by 2 basis points in this period.
As per HSH.com Vice President, Keith Gumbinger, mortgage rates likely to stay at current stable levels, unless the incoming economic data suggests otherwise. „Mortgage rates have trended up and down within a range for about the last six months now,” said HSH.com’s Keith Gumbinger. „Although rates may drift back down a little from where they are at the moment, rates are more likely to be sticky around these levels unless we start to see more economic softness or a decline in inflationary pressures. At the moment, the trend seems to be moving more in an upward than downward direction for those factors, which will tend to keep mortgage rates pretty stable.”
Switching to current mortage rates at Zillow Mortgages, the 30-year fixed mortgage increased by 2 basis points compared to data from the prior week, according to the company’s latest data. Currently, the 15-year fixed mortgage is coming out at 2.96%, while the 5/1 ARM is set at 2.91%, according to Zillow Mortgages.
Looking at Zillow’s latest mortgage data by state, in California the 30-year fixed mortgage loan is hovering at 3.81% as of May 26, an uptick of 4 basis points compared to data from the same time last week. The company’s findings revealed, that the biggest increase in 30-year fixed mortgage loans took place in New Jersey, as the interest rate on this type of loan shot up by 8 basis points to 3.82% versus last week’s 3.74% figure.
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.