Mortgage rates improved for the third straight day on Friday, effectively bringing rates to their lowest levels of the year. Mortgage pricing is more attractive now at several lenders compared to rates a week earlier. Pricing on mortgage-backed securities (MBS), which lenders use to determine daily mortgage rates, strengthened on Friday. The average mortgage lender is now offering the standard 30-year fixed mortgage at a rate of 4.125%, but some of the more aggressive loan providers are down to 4.0%.
U.S. treasury bonds were in a good shape on Friday. The yield on the top-rated 10-year treasury bond fell 7 basis points to 2.31%, the lowest level since the end of November. As mortgage rates tend to follow in the footsteps of the 10-year treasury yield, you may now see lower mortgage interest rates at your lender. The 30-year treasury bond closed Friday’s trading session at a yield of 2.95%, according to the latest market information.
MBS pricing is in negative territory this Monday morning, which might cause a setback in today’s mortgage rates. This week is going to be packed with domestic economic data, Fedspeak and President Donald Trump’s speech to Congress, so expect plenty of market volatility, that could impact mortgage interest rates in a way or another.
Current mortgage rates are slightly higher nationwide, according to Freddie Mac’s latest Primary Mortgage Market Survey (PMMS). On average, loan providers were offering 30-year fixed mortgages at a rate of 4.16% in the week ended February 23, up 1 basis point compared to data from a week earlier. 15-year fixed mortgages were offered at a higher rate as well last week, according to the federal agency’s data. The 15-year FRM averaged a rate of 3.37% last week, an uptick of 2 basis points compared to data in the prior week. On the other hand, the flexible 5-year adjustable-rate mortgage closed the week at a rate of 3.16%, down 2 basis points from the previous 3.18% that it carried a week earlier.
The past week’s most influential event was the release of the FOMC Minutes from the U.S. central bank’s last policy meeting. The Minutes revealed, that most Fed officials believe that it might be appropriate to raise the federal funds rate „fairly soon”, if the labor market remains healthy and inflation data comes in line or stronger than current expectations. While some policymakers believe that a rate increase at the next Fed meeting could be on the table, currently the market is pricing in only a 26.6% probability of a rate hike in March.
The week ahead is going to be packed with a slew of domestic economic data which will be watched closely by the U.S. central bank, as they may hold key to whether the Fed will lift rates in the near future. This week’s economic calendar includes fresh data on durable goods, pending home sales, the release of the latest Dallas Fed manufacturing survey, personal consumption expenditure inflation data, S&P Corelogic Case-Shiller home price index, revised Q4 GDP, Chicago PMI, Richmond Fed manufacturing index, weekly jobless claims, construction spending, as well as ISM manufacturing data.
One of the highlights of the week will be President Donald Trump’s speech to the Congress on Tuesday. Trump is expected to shed some light on upcoming tax reforms, as well as offering some details on how his administration plans to revamp healthcare and rollback regulations. Investors and traders will be watching Trump’s speech closely for details on the tax overhaul plan.
Fed Chairwoman, Janet Yellen, will also make a public appearance this week, as she is scheduled to speak on the economic outlook in Chicago on Friday. It goes without saying, that market participants will be watching Yellen’s speech for any hints on the timing and pace of monetary tightening.
Besides Yellen, several Fed members are set to speak this week, including Dallas Fed President Robert Kaplan on Monday, San Francisco Fed chief John Williams and St. Louis Fed President James Bullard on Tuesday, Fed governor Lael Brainard on Wednesday, Cleveland Fed President Loretta Mester on Thursday, as well as Chicago Fed President Charles Evans, Richmond Fed chief Jeffrey Lacker, Fed governor Jerome Powell and Fed Vice Chair Stanley Fischer on Friday. In the last few weeks, a number of Fed officials said, that they are expecting a rate hike to take place in the near future, in case the incoming domestic economic data remains strong. With that said, this week’s Fedspeak could offer more details on some of the top Fed officials’ views on interest rate policy.
Current mortgage interest rates are lower than a week ago. The week ahead is packed with at least two big ticket market moving events, that has the potential to push mortgage rates higher or even lower, depending on the outcome of those events. Moreover, there are several important domestic economic data lined up for release this week, that could impact mortgage rates. With that said, borrowers, who are in the process of getting a mortgage and averse to risk, may want to lock a rate sooner rather than later, as long-term trends point to higher mortgage rates.