The U.S. bond market strengthened on Thursday, following a strong 7-year treasury note auction. On the other hand, mortgage rates barely budged today compared to Wednesday’s rate sheets. Coming back to government bonds, today 7-year treasury notes were auctioned at a high yield of 1.888%, according to the Treasury Department. Moreover, the yield on the benchmark 10-year treasury note hit its lowest level in more than three weeks, finishing the day at 2.132% compared to Wednesday’s 2.137% figure.
Mortgage-buyer, Freddie Mac reported on Thursday, that the average rate on all type of 30-year fixed mortgages rose 3 basis points to 3.87% this week. Mortgage rates have been on the rise in 4 out of the last 5 weeks and the current mortgage rate on the 30-year FRM marks the highest average rate on record this year, according to Freddie Mac’s weekly Primary Mortgage Market Survey (PMMS). The average interest rate on the 15-year fixed mortgage increased 6 basis points to 3.11% this week, the McLean, VA-based mortgage financier reported.
Looking at today’s economic reports, initial weekly jobless claims unexpectedly increased in the week ended May 23, according to the latest data from the Labor Department. New claims for unemployment benefits rose by 7,000 to a seasonally adjusted 282,000 last week, which is above the consensus expectation of 270,000. The four-week moving averaged ticked up to 271,500 from the previous 266,500 figure. Despite the latest increase in jobless claims, the number of claims remained below the 300,000 threshold, which reflects firming in the labor market. Although, the current data missed expectations, and in normal circumstances weaker economic data would lead to improvement in mortgage rates, we don’t see much reaction to this news from markets.
On Thursday morning, the National Association of Realtors (NAR) reported that pending home sales, which measure contracts that have been signed but not finalized for home purchases, reached a nine-year high in April. Last month’s pending home sales increased 3.4%, far exceeding the consensus expectation of 0.8% uptick. In a year-over-year comparison, the index surged 13.3% since April 2014.
We haven’t seen much news this week regarding the Fed’s possible rate hike, but one top official from the U.S. central bank said today, that a raise in short-term interest rates this year would be a mistake. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota reiterated in a speech in Helena, Montana on Thursday, that raising interest rates this year would send a message to financial markets, that the Fed is not committed to its target inflation level. One of the more dovish members of the U.S. central bank believes that the Fed should be „extraordinarily patient” with rate hike, so the labor market can strengthen further and the economy can pick up speed.
Kocherlakota is not the only Fed member, who shares the opinion, that a rate hike this year would be premature. Last week, Chicago Fed President Charles Evans said in Stockholm, that the Fed should refrain from hiking short-term interest rates until early 2016. He expressed his concerns over low inflation and reiterated that interest rates should stay near zero this year.
On the other hand, Fed Chair Janet Yellen said in a speech at the Providence Chamber of Commerce in Rhode Island last week, that the U.S. central bank is on track to raise short-term interest rates this year.
„If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target,” said Yellen. She expressed that the Fed would need to be „reasonably confident that inflation will move back to 2% over the medium term,” before preparing to hike rates.
Moving on to today’s mortgage rates at top lenders, at U.S. Bank (NYSE:USB) the 30-year fixed home loan is up for grabs at a rate of 3.950%. The 15-year version of this home purchase loan can be secured for as low as 3.250%. Those looking for FHA home loan options, may want to consider the 30-year FHA mortgage at this lender, as it’s coming out at 3.750%. In case of the 15-year FHA home purchase mortgage, it demands 3.250% interest cost.
Staying with home purchase loans, over at Capital One (NYSE:COF) the 30-year FRM is published at a rate of 3.750%, according to the updated loan information. Borrowers, who are interested in obtaining the 15-year fixed counterpart, can expect to pay 3.125% interest cost.
At another top U.S. lender, Bank of America (NYSE:BAC) the 30-year fixed home mortgage plans are starting at a rate of 3.750%. The shorter-term, 15-year conventional home loan carries 3.000% interest cost, as of today. The financial institution’s refinance loan program includes the long-term 30-year fixed home refi loan, which could see balances cleared at a rate of 4.000%. The popular 15-year home refinance mortgage is another possible option, and currently it starts at 3.000%, the latest data showed.
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.