Current Mortgage Rates Roundup for January 11, 2017

Mortgage rates were holding pattern on Tuesday, while U.S. treasury yields held steady too, as 3-year government notes saw solid demand from investors. Yields on goverment bonds are hovering in a tight range since the release of the latest Employment Situation report last Friday. Although, mortgage rates moved a bit since Tuesday morning, the net change has been so minor, that a lot of lenders haven’t revised their rate sheets with different pricing. Currently, the average lender is offering the 30-year fixed conventional loan in the range of 4.125% – 4.375%, with the most prevalently quoted rate being 4.125%, according to the latest data.

In the secondary market the benchmark 10-year treasury note closed Tuesday’s trading session at a yield of 2.38%, the same level as a day earlier. Mortgage interest rates and 10-year treasury bonds have a strong correlation. If the yield on the 10-year note drops, mortgage rates usually follow suit. However, if the 10-year treasury yield increases, mortgage rates are often trending higher. With that said, current mortgage rates are in line with rate levels from yesterday at the majority of lenders. As far as the longer-term 30-year treasury bond is concerned, the yield remained unchanged at 2.97% at the end of yesterday’s trading day.

This morning pricing on mortgage-backed securities (MBS) is up, which could possibly pave the way for mortgage rates to see an improvement, after mostly holding pattern in the first half of the week.

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There are no major economic reports or headlines scheduled for release on Wednesday, that could drive a change in the bond market. On the other hand, some Fed officials will make public appearances today and share their views on future monetary policy. Also, a 10-year treasury note auction will take place this Wednesday, which depending on the outcome could impact the bond market and indirectly the movement of mortgage rates as well. This week’s most important domestic economic report, the December retail sales data, is going to be released on Friday.

In other news, Goldman Sachs chief economist Jan Hatzius said at a conference on Monday, that the U.S. central bank could possibly increase short-term rates as many as four times this year. The investment bank sees a 35% „subjective possibility” for a rate hike to take place in March, according to the economist. As the majority of market participants are betting on two rate hikes in 2017, Goldman Sach’s estimation of four possible rate increases is a more hawkish sentiment. The much-watched CME FedWatch tool, which is used by investors and traders to predict future monetary policy, currently shows that market participants are pricing in a 24% probability of a rate liftoff to take place at the March Fed meeting.

Applications for U.S. home loans hit a six-month high last week, following an improvement in mortgage rates, according to The Mortgage Bankers Association’s (MBA) latest survey released this Wednesday. The Washington-based group’s survey showed, that loan applications volume rose a seasonally adjusted 5.8% last week. The number of applications for home refinancing increased 4% on a seasonally adjusted basis, while loan requests for home purchases were up 6% from one week earlier. The refinance share of total mortgage activity decreased to 51.2% from 52.2% the previous week.

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The MBA’s Weekly Mortgage Applications Survey also revealed that the average contract interest rate for 30-year fixed mortgages with conforming loan balances ticked down to 4.32% from 4.39% last week. The average contract interest rate for 30-year FRMs with jumbo loan balances improved to 4.27% from 4.37% in the said period. According to the group’s latest survey, the average contract interest rate on 30-year fixed mortgage loans backed by the FHA headed lower to 4.08% from the previous 4.22% a week earlier.

Financial firm Zillow reported on Tuesday, that the average interest rate on the benchmark 30-year fixed mortgage was on a downward trajectory during the wraparound week ended yesterday. The 30-year fixed rate loan ended the week at 3.88%, a decrease of 8 basis points compared to data from the prior week. According to the company’s findings, the 15-year fixed mortgage carried a rate of 3.08%, while the 5/1 ARM was offered at 3.01% in the wraparound week ended Tuesday on Zillow Mortgages.

A regional breakdown of current average mortgage rates shows, that in California, the 30-year FRM was hovering at 3.86% as of Tuesday, a 9 basis point drop compared to data in the prior week. The biggest weekly drop in rates took place in Massachusetts state, where the current average interest rate on the 30-year fixed mortgage is coming out at 3.83%.