Mortgage rates increased on Thursday, effectively bringing rates to their highest levels of the year. Interest rates have been under and upward pressure for more than a week now. The current trend clearly doesn’t support low mortgage rates and there’s a chance that today’s all-important jobs report may drive rates even higher. The most prevalently quoted mortgage rate on 30-year fixed conventional loans is 4.375% in the best scenarios, but some lenders are offering this type of mortgage for as high as 4.5%, according to the latest market data.
U.S. treasury prices extended their slide yesterday, ahead of the release of February’s big jobs data on Friday. Investors and traders are anticipating robust employment numbers, that could likely cement a rate hike at next week’s Fed meeting. The yield on the benchmark 10-year treasury bond, which is one of the most widely followed market indicator in the global economy, rose 3 basis points to 2.60% during Thursday’s trading session. The long-dated 30-year treasury bond closed the trading day at a yield of 3.19%, up 4 basis points from a day earlier.
Mortgage-backed securities (MBS), which have a strong correlation with mortgage rates, are in a bad shape this Friday morning, ahead of the release of February’s NFP data. A strong employment data could cause further weakness in the bond market, which could eventually push today’s mortgage rates higher.
Current mortgage rates hit the highest levels of the year, according to Freddie Mac’s weekly Primary Mortgage Market Survey (PMMS) released Thursday. The Virginia-based housing giant’s latest survey showed, that on average, lenders were offering 30-year fixed mortgages at a rate of 4.21% in the week ended March 9, up 11 basis points compared to data from a week earlier. This marks the highest average rate for the 30-year fixed mortgage in 2017, according to the federal agency’s data. The shorter, 15-year FRM averaged a rate of 3.42% this week, which translates to a 10 basis points uptick over the previous 3.32% a week earlier. The 5-year ARM followed a similar pattern this week, as the average mortgage rate jumped 9 basis points to 3.23%, Freddie Mac reported.
On the economic front, the Labor Department reported on Thursday, that initial jobless claims rebounded from a 44-year low last week. The number of Americans filing for unemployment benefits increased by 20,000 to a seasonally adjusted 243,000 in the week ended March 4, official data revealed. This marks the 105th straight week that claims are below the threshold 300,000 figure, which signals a fairly robust, healthy labor market.
U.S. import prices rose 0.2% last month, following an upwardly revised increase of 0.6% in January, the Labor Department reported on Thursday. On the other hand, export prices advanced 0.3% in February, after advancing an upwardly revised 0.1% a month earlier.
February’s job numbers are coming out this morning and market participants will be closely watching the results. Economists believe the U.S. economy liked added 190,000 jobs last month. If the job figures exceed the consensus expectation, mortgage interest rates will most likely increase. Moreover, a positive employment report could cement the likelihood of a rate increase at the Fed’s next meeting on March 14-15. However, if the upcoming employment data fails to live up to expectations, mortgage rates could fall.
UPDATE: February’s Non-Farm Payrolls data is out, and the U.S. Bureau of Labor Statistics’ report show that the economy created 235,000 jobs last month, versus 238,000 jobs a month earlier. This figure is significantly better than the consensus expectation and it will most likely give the Fed the green light to hike rates in March. The Employment Situaton report also showed, that average hourly earnings increased 0.2% in February, following a rise of 0.2% a month earlier. Government payrolls rose by 8,000, after an uptick of 17,000 in January. Manufacturing payrolls have also seen an increase of 28,000 workers versus an addition of 11,000 jobs back in January.