Mortgage rates moved slightly higher late last week amid volatile market conditions, as yields on U.S. treasuries increased and they took mortgage-backed securities (MBS) with them for a ride. Pricing on MBS, which most directly influence interest rate movement, ticked up on Friday, and as a result mortgage rates drifted higher as well. However, most lenders have made only minor adjustments to their rate sheets on Friday. According to our observations, the average lender is quoting the 30-year fixed mortgage rate in the range of 3.75% – 3.875% as of this writing. Although, current mortgage rates are slightly higher compared to those in the beginning of last week, they are still hovering near 5-month lows, leaving borrowing costs at attractive levels, which makes more affordable to buy a new or used home or refinance an existing mortgage.
The yield on the benchmark 10-year fixed treasury note closed the past week at 2.09%, which is 5 basis points higher compared to the yield on Thursday. The longer-term 30-year treasury note finished Friday’s trading session at a yield of 2.90%, which translates to a 3 basis points increase compared to data from a day earlier.
Now, this morning mortgage rates are lower, as pricing on MBS increased, following the release of a set of disappointing domestic economic data (more on these economic reports later).
Mortgage-finance company, Freddie Mac reported last week, that the national average rate on the 30-year fixed mortgage dropped to 3.79% from the previous 3.82% that it carried the week before. The same time a year earlier, the 30-year FRM averaged a rate of 3.92%. In addition, the current mortgage rate on the 15-year fixed loan is now below 3% nationwide, according to the mortgage-buyer’s latest weekly Primary Mortgage Market Survey (PMMS). The average rate on the aforementioned mortgage loan is now 2.98%, down from the previous 3.03% that it held in the prior week. At this time a year ago, the 15-year fixed mortgage averaged a rate of 3.08%.
With regards to more flexible mortgage loans, the 5-year treasury-indexed hybrid ARM averaged a rate of 2.89% in the week ended October 22, a 1 basis point uptick compared to the prior week’s data. This time a year earlier the 5-year ARM was hovering at 2.91%. In case of the 1-year adjustable rate mortgage, it came out at 2.62% last week, an increase from the previous 2.54% a week earlier. At this time in 2014, the 5-year ARM carried a rate of 2.41%.
The government-sponsored enterprise’s latest national mortgage survey also showed, that the lowest average rate on the 30-year fixed mortgage was measured in the Western region last week. In that region, the current mortgage rate on the 30-year FRM is 3.73%. On the other hand, the highest average rate on this long-term, conventional mortgage loan was measured Northeast and Southeast regions, where it came out at 3.83%, according to Freddie Mac’s survey.
This week’s economic calendar features a good deal of economic data, including several housing market and manufacturing reports, but the most influential event of the week will be the upcoming FOMC meeting which will kick off on Tuesday. Market participants will be closely watching the Fed this week to take cues about the central bank’s monetary policy. According to the CME FedWatch, the market now sees a 6% chance for a rate hike at the upcoming policy meeting in October, and a 35% probably for a rate liftoff in December.
Two pieces of economic data saw the light of day this Monday in the form of September’s new home sales data and the Texas Manufacturing Outlook Survey for October. The Commerce Department reported earlier today, that new home sales declined to near a one-year low in September, following two consecutive months of increases. New home sales plummeted 11.5% to a seasonally adjusted annual rate of 468,000 units in September, which marks the lowest level since November 2014. This is not a good reading by any means, and certainly not one that would support a rate hike in the nearest future. Moreover, August’s new home sales figure was revised down to 529,000 units from the initially reported 552,000.
Looking at today’s regional manufacturing data, it looks like that the manufacturing sector is in contraction in the Dallas region lately. The Texas Manufacturing Outlook Survey for October came in at -12.7, missing the consensus expectations of -6.0. And it’s also down from the previous month’s reading of -9.5. This is the 10th straight negative report, indicating that manufacturing conditions in the region has been weak for months now.
As far as today’s mortgage rates are concerned, the 30-year fixed, conventional home loan is quoted at Bank of America (NYSE:BAC) at a rate of 3.750%. The 15-year version of this type of mortgage can be obtained at a rate of 3.000%. Those looking for more flexible loan options, may want to take a look at BofA’s 7/1 ARM, which is coming out today at a rate of 3.125%. Switching to non-conventional loan options, the 30-year FHA-insured home purchase loan is up for grabs at a rate of 4.000% as of Monday.
At another top lender, Wells Fargo (NYSE:WFC), the benchmark 30-year fixed home purchase mortgage is offered at a rate of 4.000% in the beginning of the week. The lender’s shorter-term, 15-year fixed home mortgage can be secured at a rate of 3.250%. At the San Francisco-headquartered loan provider, the 7/1 adjustable rate mortgage is currently available at a rate of 3.250%, according to our observations.
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.