Mortgage rates remained near their highest levels of 2015 on Thursday, as today’s decent 7-year treasury note auction made only litte impact on market movements. U.S. treasury bonds pulled back for the third time in four days, as a stronger-than-expected consumer spending data drove investors to riskier assets. The upbeat domestic economic data overshadowed the lack of progress in Greece’s debt talks, thus not leaving room for a rally for bonds today.
On Thursday, the yield on the benchmark 10-year treasury note ticked up to 2.40% from Wednesday’s 2.38%. On the other hand, the yield on the 30-year treasury note remained firm at 3.16% at the end of the trading session. With regards to mortgage bonds, pricing on mortgage-backed securities (MBS), dropped slightly on Thursday. As MBS normally influences lender pricing, you may see slight changes in mortgage rates and/or closing costs at your lender.
The 7-year treasury note auction saw a strong demand in the afternoon, as traders got attracted by the high yields. The aforementioned treasury notes were sold at a yield of 2.153% on Thursday afternoon, which marks the highest level since September. Mortgage rates could have experienced a nice rally later in the afternoon if things turn out well for them, but unfortunately, the strong 7-year treasury note auction hasn’t had much impact on market movements, and interest rates barely budged.
As we mentioned above, today’s economic calendar saw the release of an upbeat economic data, in the form of May’s consumer spending report. Consumer spending increased by the most in almost six years last month, posting a 0.9% jump, according to the Commerce Department’s latest report released earlier today. The current figure is up from April’s revised 0.1% increase. The encouraging consumer spending data is another sign, that the U.S. economy is gaining momentum in the second quarter.
Initial claims for state unemployment benefits edged modestly higher last week, the Labor Department reported on Thursday. Jobless claims rose by 3,000 to a seasonally adjusted 271,000 in the week ended June 20. The consensus expectation was for a reading of 273,000. This marks the 16th consecutive week that claims are below the 300,000 threshold, a number which is associated by many analysts with a healthy labor market. The four-week moving average of jobless claims, an accurate indicator of labor market trends, slipped by 3,250 to 273,750.
As far as the Federal Reserve’s impending rate hike is concerned, in the last couple of days a few officals from the U.S. central banks shared their views on the organization’s interest rate policy going forward. As we reported before, San Francisco Fed President John Williams expressed last Friday, that he supports a wait-and-see stance on interest rate policy, until he sees more evidence that inflation target levels are met. Williams believes that the Fed will raise rates until the end of the year. He told reporters that the U.S. central bank should hike rates twice this year, provided that the economy performs well and meets the Fed’s expectations.
Fed governor, Jerome Powell expressed his opinion regarding the U.S. central bank’s interest rate policy on Tuesday, saying that a rate hike could potentially take place in September and an additional increase in December. He added that a raise in short-term interest rates requires a significantly stronger economic growth going forward compared to the performance in the first quarter. Powell, who is a voting member of the FOMC committee, said that he sees 50 percent chance for a liftoff in rates at the September FOMC meeting.
Average national mortgage rates saw little changes throughout the week, as the 30-year fixed mortgage inched up to 4.02% this week, from 4.00% in the prior week, according to Freddie Mac’s latest weekly Primary Mortgage Market Survey (PMMS) released Thursday. A year ago at this time the same type of mortgage loan averaged a rate of 4.14%. The federal agency’s survey also showed, that the average interest rate on the 15-year fixed mortgage loan saw a downtick of 2 basis points to 3.23% this week. The same time a year earlier, the 15-year FRM averaged a rate of 3.22%. Rates on adjustable-rate mortgage loans experienced a few basis points changes this week, the mortgage-buyer’s latest data revealed. The 5-year ARM averaged 2.98% this week, down from last week, when it carried a rate of 3.00%. According to Freddie Mac’s survey, the interest rate on the 1-year ARM improved by 3 basis points, averaging 2.50% this week.
Bankrate’s weekly national mortgage survey released today showed a bit different results across the board. According to the company’s survey, the 30-year fixed mortgage averaged a rate of 4.16% this week, up from 4.13% that it held last week. The average rate on 15-year fixed loans hasn’t seen any changes this week, it remained at 3.35%, Bankrate reported. Adjustable-rate mortgages carried higher mortgage rates this week, with the 5-year ARM moving up to 3.23% and the 10-year ARM climbing to 3.77%.
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