Mortgage rates held their ground on Tuesday, following a slight uptick in interest rates a day earlier. U.S. treasury bonds were in a better shape for the second straight trading session on Tuesday, with yields moving down, as investors flocked into safe haven assets amid global geopolitical tensions. According to our observations, the average lender is now quoting the standard 30-year fixed mortgage rate in the range of 4.000% – 4.125% in most cases. Since mid-October, expectations have hardened that the Federal Reserve will move away from zero interest rate policy at the upcoming FOMC meeting in December, which could potentially lead to higher mortgage rates.
On Tuesday, the yield on the benchmark 10-year treasury note, which is a bedrock of global finance, declined 1 basis point to 2.24%. As mortgage interest rates tend to follow the movement of the 10-year treasury bond, you may see that certain lenders made some slight adjustments to their rate sheets compared to Monday’s levels, however, most of the changes can be seen in lower upfront costs or higher lender credit, instead of a lower contract rate. As a result, current mortgage rates are pretty much in line with those levels seen in the beginning of the week. As far as the longer-term, 30-year treasury yield is concerned, it finished Tuesday’s trading day at 3.00%, unchanged since the beginning of the week.
Average mortgage rates eased nationwide this week, according to government-sponsored enterprise Freddie Mac’s latest weekly Primary Mortgage Market Survey (PMMS) released today. The mortgage giant’s survey showed, that the national average rate on the 30-year fixed mortgage dipped to 3.95% this week, leading up to the Thanksgiving holiday. This marks a 2 basis points decline compared to data from a week earlier. The same time a year earlier the 30-year FRM averaged a rate of 3.97%. As for the 15-year fixed mortgage, the average rate on this type of loan remained unchanged at 3.18% this week. Back in 2014, the 15-year fixed mortgage rate stood at 3.17%.
With regards to adjustable rate mortgages, the current average rate on the 5/1 ARM is hovering at 3.01%, an uptick of 3 basis points compared to data in the prior week. A year ago this type of mortgage averaged a rate of 3.01%, according to the federal agency’s data. In case of the 1-year ARM, the national average rate on this flexible mortgage slipped to 2.59% this week, down 5 basis points compared to data from a week earlier. The same time a year ago, the 1-year ARM averaged a rate of 2.44%.
Now, heading over to today’s domestic economic reports, durable goods orders jumped 3% last month, according to fresh data released by the Commerce Department. The rebound in orders is a welcome change, following two straight month of declines.
Another report which got released today was the personal income and outlays data for October. Personal nominal income rose 0.4%, while consumer spending grew 0.1% last month, the latest data showed. The Core PCE indicator, which is the Fed’s preferred measure for inflation, remained flat in October. While the Fed is closely watching core PCE inflation, the latest reading clearly doesn’t bolster the odds of a rate hike at the upcoming policy meeting next month.
U.S. jobless claims fell well below the expected range last week, according to data released earlier today by the Labor Department. Initial claims for state unemployment benefits declined by 12,000 to a seasonally adjusted 260,000 in the week ended November 21. This figure is better than the consensus expectation of 270,000 claims. This marks the 38th consecutive week that claims are below the threshold 300,000 figure, which signals a fairly robust, healthy labor market.
Sales of newly-built single-family homes rebounded in October, a fresh report released this Wednesday by the Commerce Department revealed. Following a steep drop in new home sales in September, sales climbed 10.7% to a seasonally adjusted 495,000 in October, which may allay concerns of a slowdown in the housing market.
The U.S. services sector bounced back this month, Markit Economics’s latest flash services purchasing manager’s index (PMI) showed. The index for November came in at 56.5, which marks a seven-month high, beating expectations of a 55 reading.
The University of Michigan’s final consumer sentiment index for November slipped to 91.3 in November, from the previously reported 93.1 earlier this month. However, this is a better figure compared to October’s reading of 90, indicating that Americans are more upbeat about their economic outlook.
This Wednesday brought us another housing market report in the form of the Federal Housing Finance Agency’s house price index for September. The index rose 0.8% in September, beating forecasts of a 0.4% reading.
As we mentioned in our previous reports in the last few weeks, the market is widely expecting a rate hike at the upcoming Fed meeting in December. According to the CME FedWatch tool, which is used by investors and traders to predict future monetary policy, the market is pricing in a 78% probability of a rate hike at the December FOMC meeting. If the Fed increases short-term rates next month, that could put an upward pressure on mortgage rates. And this could lead to the end of sub-4% 30-year mortgage rates. So if you are looking to get a new mortgage these days for home purchase or refinancing, but you can’t handle the risks of higher mortgage rates, we advise you to lock a rate sooner rather than later.
In order to search for live mortgage rate quotes from some of the top U.S. lenders, please click on the link below.