Mortgage rates headed lower on Tuesday, and now they are hovering at levels haven’t seen since early July. There was no particular driving force behind today’s improvements, as it looks like the market has been in a wait-and-see mode this week. Investors turned their attention to ultra-safe haven assets, amid a selloff in commodities and a decline in stock prices. Treasury yields improved today, and as mortgage rates tend to follow 10-year treasury bond moves, chances that you will see lower mortgage interest rates at your loan provider on Tuesday.
According to our observations, several lenders posted improved rate sheets today, and some of them are now quoting slightly lower interest rates on long-term 30-year conventional mortgages compared to yesterday’s quotes. At other lenders, the current improvements can be seen in slightly lower closing costs. If you haven’t locked a rate in the beginning of the week, this Tuesday brings another golden opportunity to pull the trigger, especially if your lender has already passed along today’s gains. Floating remains risky in the current volatile market environment and only float if you can afford to be wrong.
U.S. treasury bonds strengthened on Tuesday, amid a light trading volume, with the yield on the benchmark 10-year slipping to 2.35% from the previous 2.38% that it carried a day earlier. The 30-year treasury note has seen some improvements as well during Tuesday’s trading session, with the yield on this type of bond decreasing to 3.08% from 3.10% that it held back on Monday.
In other news, a survey conducted by Fannie Mae showed, that 50% of the respondents believe that mortgage rates will rise beyond 2015. Fannie Mae’s National Housing Survey for June also revealed that 37% of polled U.S. households think that mortgage interest rates will stay the same in the next 12 months, and only 4% of the survey participants believe that interest rates will improve in the near future.
Tomorrow we will get a notable domestic economic report, in the form of existing home sales for June. According to the latest forecasts from economists, sales of previously owned homes likely increased at a slower pace of 1.2% to a seasonally adjusted annual rate of 5.40 million last month. The latest existing home sales data, released in May, was a strong one, showing a 5.1% growth to an annualized rate of 5.35 million units.
The Federal Reserve’s upcoming policy meeting will take place next week, but we doubt that the U.S. central bank will make an announcement during this event about raising rates in September. While it looks like that the majority of Fed members are favoring a tightening this year, and currently most analysts expect a liftoff in September, we believe the policy makers are looking for more evidence that the economy is gaining speed before fully committing to hiking rates. Although, it’s widely expected that the Fed will take action later this year, we can only hope that the hike is, at least partially, priced into bonds already. If not, we could see plenty of market volatility and big price swings once the rate hike occurs, and this could be pretty bad for mortgage rates.
Financial company, Zillow reported today that 30-year fixed mortgage rates were on a downward trajectory during the wraparound week ended on Tuesday. According to the firm’s findings, the 30-year FRM averaged a rate of 3.91% during the Wednesday-to-Tuesday wraparound week. The current interest rate on the 30-year fixed loan is 4 basis points lower compared to data from a week earlier. On the other hand, the average interest rate on the 15-year fixed mortgage is currently hovering at 3.03%, while the 5/1 ARM is coming out at 2.89% at Zillow Mortgages. The company expects mortgage rates to be mostly flat this week, with not much market-moving economic data in the way.
Looking at 30-year fixed mortgage rates by state, the biggest weekly improvement took place in California, where the aforementioned loan averaged a rate of 3.90% during the wraparound week. This marks a 7 basis points improvement compared with 3.97% a week ago. The lowest average interest rate on the 30-year fixed mortgage was measured in Colorado and Massachusetts states, where this type of conventional mortgage was hovering at 3.88%.
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