Current Mortgage Rates Roundup for March 1, 2017

Mortgage rates were flat on Tuesday, following temporary weakness in the bond market, as stronger-than-expected domestic economic data failed to influence investor sentiment. While pricing on mortgage-backed securities (MBS), which are bonds that lenders are monitoring to determine daily mortgage rates, declined yesterday, lenders have made only minor adjustments to their rate sheets. With that said, current mortgage rates this morning are basically just as good as a day earlier. Mortgage lenders continue to offer standard 30-year fixed mortgages in the range of 4.000% – 4.250% in the best scenarios. The most prevalently quoted rate on the 30-year FRM remains at 4.125%, according to the latest mortgage information.

U.S. treasury yields remained in recent ranges on Tuesday. The benchmark 10-year treasury note closed the trading session at a yield of 2.36%, unchanged compared with data on Monday. Mortgage interest rates usually trail behind the 10-year treasury yield, but this isn’t an exact science. Still, when the yield on the 10-year note rises, mortgage rates are often trending higher. On the other hand, when the 10-year treasury yield drops, mortgage interest rates usually follow suit. With regards to the latest market data, the 30-year treasury note finished Tuesday’s trading day at a yield of 2.97%, a decline of 1 basis point since the beginning of the week.

today's mortgage rates march 1, 2017

Pricing on MBS is in the red this Wednesday morning, which hurts today’s mortgage rates. The market keeps digesting Trump’s speech, as well as hawkish comments from several Fed officials (more on that later). In addition, several economic reports are slated for release later today, that could impact investor behaviour, the bond market and eventually mortgage rates as well.

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One of the big ticket, market moving events of the week took place yesterday night, as President Donald Trump spoke before the Congress. In his long-awaited speech to the Congress, President Trump called for infrastructure boost, improvements on healthcare and vowed to provide massive tax relief to the middle class. However, he gave little details on how he plans to achieve those ambitious goals. Despite big expectations, Trump’s speech had little initial effect on financial markets. Investors rather turned their heads to the Fed, with a host of hawkish comments coming from top U.S. policymakers, suggesting that a rate hike in March could be on the table.

In an interview with CNN International on Tuesday, New York Fed President William Dudley said, that he expects a rate hike in the „relatively near future”. Following his hawkish comments yields on both the benchmark 10-year note and the 2-year note rose.

Another central bank official, Philadelphia Fed chief Patrick Harker reiterated his stance on interest rate policy on Tuesday, that he expects the U.S. central bank to raise rates three times in 2017, as long as the economy stays on course. „I see three hikes as appropriate for 2017, assuming things stay on track,” Harker said in prepared remarks at Temple University.

San Francisco Fed President John Williams said in California on Tuesday, that a rate hike at the upcoming FOMC meeting in March should get a „serious consideration”. The Bay Area Fed official, who isn’t a voting member of the central bank’s policy-setting committee this year, added: „I am confident that the economy will continue to grow at a healthy pace even as we raise rates,”.

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The same day, St. Louis Fed chief James Bullard said in a speech at George Washington University, that the U.S. central bank can afford to be patient with raising short-term rates this year, given his forecast of slow growth and low inflation. „I wouldn’t see any reason to be especially aggressive about interest-rate hikes in this environment,” Bullard said.

Back on Monday, Dallas Fed President Robert Kaplan called for a rate increase „sooner rather than later”, without giving specifics on the timing of the rate hike.

This Wednesday morning, the odds for a rate hike in March is now at 68.6%, according to the CME FedWatch tool. Market expectations for a rate increase surged by more than 30% since Tuesday morning, following hawkish comments from some Fed members.

Now, turning focus to the latest economic data, a slew of important economic reports got released on Tuesday. The second print for Q4 GDP came in at 1.9%, unchanged from the first estimate. The consensus expectation was for an increase of 2.1%.

In other news, according to the latest S&P/Case-Shiller U.S. National Home Price Index released Tuesday, home price growth across the country continued to rise in December, hitting a two-and-a-half year high. The latest index showed, that home prices rose 5.8% in December year-over-year, up from the previous 5.6% increase in November. The 20-city composite index showed a similar trend, as home price growth accelerated in December compared to November’s reading. The 20-city composite index increased 5.6% in the three-month period ending in December compared to data from a year earlier, the latest data from S&P Dow Jones Indices revealed. The report signals that the housing market continued to gain momentum in the final months of 2016.

Economic activity in the Midwest region surged in February, the latest Chicago PMI revealed. The Chicago Purchasing Managers Index rose 7.1 points to 57.4 last month, exceeding the consensus expectation of 53. Manufacturing activity in the Chicago-area increased to a two-year high in February, bolstering optimism over the economic outlook.

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U.S. consumer confidence unexpectedly soared to the highest level since 2001, according to the Conference Board’s data. The organization’s consumer confidence index surged to 114.8 in February from 111.6 in January. Previously, economists had projected a reading of 111.3 for February. Overall, Americans grew more upbeat about the outlook on business and employment conditions last month.

As far as today’s economic calendar is concerned, a plethora of data is due for release. The ISM Manufacturing Index for February is coming out later today. Economists believe, that manufacturing activity likely held steady last month, following a reading of 56 in January.

The upcoming Personal Income and Outlays report for January is slated for release on Wednesday. Personal nominal income likely increased in the beginning of the year, while consumer spending is expected to have slowed, according to the most up-to-date estimations.

The Fed’s Beige Book will also see the light of day this mid-week, which may garner some attention from market participants, as it provides information about current economic conditions from the U.S. central bank’s perspective.

Fedspeak will continue to be watched by investors today, as Dallas Fed President Robert Kaplan and Fed governor Lael Brainard are among those who will speech about monetary policy.

Mortgage interest rates are holding steady near historically low levels, but the upcoming Fed meeting in March might pose a risk for low mortgage rates. The latest data from the CME FedWatch tool shows, that the chance of a short-term rate hike in March almost doubled since yesterday. While nobody knows the exact timing of the next rate hike, whenever the monetary tightening happens, mortgage rates are expected to rise. With that in mind, borrowers, who are in the process of getting a mortgage to buy a home or refinance an existing loan, may want to strike while the iron is hot.