Mortgage rates increased slightly on Friday, closing a week, that was mostly favorable for interest rates nationwide. U.S. treasury bonds were trading at weaker levels on Friday and eventually mortgage rates regressed. However, current mortgage rates remain attractive, as they maintain those levels seen a week earlier. Last week, mortgage interest rates posted three days of gains, two days of losses, and finished the week with very little net change. According to the latest mortgage information, on average, lenders were offering 30-year fixed mortgages at a rate of 4.125%, which is the most prevalently quoted rate for the said mortgage loan in the last couple of days.
Treasury yields were mixed on Friday. The benchmark 10-year treasury yield, which is considered one of the best market indicators of where mortgage rates are heading, closed the trading session 1 basis point higher at 2.41%. On the other hand, the long-term 30-year treasury yield improved 1 basis point to 3.01%, Friday’s market information revealed.
Looking at Monday’s market data, pricing on mortgage-backed securities (MBS) are in the green, which is a positive sign for today’s mortgage rates. If MBS pricing, which lenders use to determine daily mortgage rates, remains in positive territory, interest rates could benefit.
Average mortgage rates are lower nationwide, according to Freddie Mac’s latest Primary Mortgage Market Survey (PMMS) released Thursday. The government-sponsored agency’s latest weekly survey showed, that the average rate on the 30-year fixed mortgage dropped 2 basis points to 4.17% in the week ended February 9. The current average mortgage rate on the shorter, 15-year fixed loan is now down to 3.39%. A week earlier this type of mortgage was carrying a rate of 4.41%. With regards to the 5-year adjustable-rate mortgage (ARM), the average rate declined 2 basis points to 3.21% last week, Freddie Mac reported. Mixed economic data and uncertainty over the Trump administration’s fiscal policies have contributed to the improvements in mortgage rates last week, according to the federal agency.
The beginning of the week is going to be particulary light on big ticket economic data. With no major economic data slated for release until Wednesday, markets will likely be impacted from news and headlines from across the pond. With that in mind, we don’t anticipate big net changes in mortgage rates in the beginning of the week. However, starting from Tuesday, several important domestic economic data will get released, including fresh housing market reports and the latest retail sales data. Moreover, some Fedspeak is scheduled for this week, as well as Fed Chairwoman Janet Yellen’s semiannual monetary policy testimony.
It goes without saying, that investors and traders will be watching Yellen’s testimony before the Congress closely for hints on the timing of the next rate hike. Economists believe, that Yellen will leave the possibility of a rate hike in March on the table and will stick to the Fed’s plan of three rate increases this year. The Fed Chairwoman will begin her two-day testimony before the Congress on Tuesday.
The list of other U.S. central bank members, who are set to make public appearances on Tuesday includes Richmond Fed President Jeffrey Lacker, Atlanta Fed President Dennis Lockhart, and Dallas Fed President Robert Kaplan. It will be interesting to hear these Fed officials’ thoughts on future monetary policy and their stances on the pace of rate increases going forward. According to the CME FedWatch tool, which is used by investors and traders to predict future monetary policy, the market is pricing in 13.3% chance of a rate increase at the next Fed meeting in March.
The first influential data in this week’s economic calendar is scheduled for release on Tuesday, in form of the January Producer Price Index. Overall, the producer price index shows the prices that businesses receive for their goods and services. The consensus expectation is that U.S. producer prices cooled last month, and likely advanced 0.2% in January from the previous month. As for the core PPI, a key indicator which excludes the volatile food and energy categories, it’estimated to remain flat in January.
We will also get fresh data on consumer prices this week, as the Labor Department will release its monthly Consumer Price Index on Wednesday. Economists are expecting an increase of 0.3% month-over-month for January’s CPI.
The U.S. Industrial Production Index for January expected to show a tepid 0.1% increase, compared to the 0.8% uptick a month earlier. A fresh report on industrial production will come out this mid-week.
In terms of big ticket data, one of the highlights of the week will be the fresh reading on retail sales. The upcoming retail sales data will give us clues whether U.S. consumers boosted their spending last month. According to analysts, retail sales likely rose 0.1% last month, following a 0.6% increase in December. Core retail sales, which don’t include automobiles and gas, likely inched up 0.4% in January, the latest forecasts show.
The Empire State Manufacturing Index for February is expected to show an increase to 7.0 from the previous 6.5 a month earlier. The Federal Reserve Bank of New York will release its latest regional manufacturing survey on Wednesday.
Home-builder sentiment in February is expected to remain at 67, after a 2 point slip in January. The National Association of Home Builders’ latest home-builder sentiment index, which is closely watched within the industry, is set to be released this mid-week.
A fresh report on housing starts will see the light of day later this week. The latest estimations from economists suggest, that housing starts likely advanced 0.3% to a seasonally adjusted annual rate of 1.2 million units in January, following a sharp rise in December. Building permits, on the other hand, are expected to rise at a rate of 1.23 million in January.
On Thursday, the Labor Department will publish a fresh reading on jobless claims, which will provide us information about the current state of the labor market. The latest report from last week, showed that the number of Americans filing for unemployment benefits fell to near a 43-year low. For the upcoming jobless claims data the consensus expectation is a reading of 245,000.
Mortgage interest have found their footing recently, and still remain attractive for those who are looking to purchase a home or refinance an existing loan. However, all the above mentioned upcoming economic events can impact mortgage rates in one way or another, so it will be interesting to see where rates are heading this week.