Mortgage interest rates remained unchanged on Wednesday, following the release of the Minutes from the Fed’s last policy committee meeting in April. The Minutes provided little clues on the timing of the Fed’s impending rate hike, but the group has generally ruled out a raise in short-term interest rates in June. What’s clear at this point, that the members of the Fed maintain different views on the exact timing and the pace of a rate hike. Many Fed officials expressed their concerns that a rate hike by midyear would be too premature, as the incoming economic data isn’t strong enough to justify a lift in rates, with certain factors holding back the economic growth. Before switching to a tightening mode, Fed members would like to be more confident that the situation in the job market improves further, the inflation rises gradually toward the target level, and the economy rebounds going forward. A recent survey conducted by Reuters revealed, that economists believe a rate hike in the third quarter is the most plausible.
As we reported earlier this week, the U.S. central bank seems to be determined to raise interest rates this year, but as the Fed repeatedly said, incoming ecoming data will define the exact timing of tightening. However, not all Fed members are sold on this year’s planned rate hike. Earlier this week, one of the more dovish officials of the Fed, Charles Evans said in Stockholm, that the U.S. central bank should refrain from hiking short-term interest rates until early 2016. Evans expressed his concerns over low inflation and reiterated that interest rates should remain near zero this year.
While the outcome of the Fed’s Minutes should have been supportive for mortgage rates, they haven’t really budged after all, as MBS trading levels remained steady. Pricing on treasury bonds strengthened today and their yields have fallen. The yield on the benchmark 10-year treasury note fell to as low as 2.23%, before settling at 2.25%. All this means, that depending on the lender you may see some lower mortgage rates today compared to Tuesday’s levels, but don’t expect significant alterations. At the majority of top lenders, interest rates have remained intact today, according to our observations.
The weakness in the European bond markets, which is the epicentre of recent sell-off in German Bunds and spike in bond yields, remains a major factor that indirectly influences U.S. mortgage rates. Even that the majority of recent domestic economic data has been subpar at best, they had little impact on the prevailing trend of rising rates over the last few weeks. Therefore we should keep an eye on the events, especially Greece’s bailout deal which is due in May, and bond market movements in Europe, and their impact on US. mortgage rates.
So rates have been rising lately, but whether they continue in this direction in the near future or will show some signs of improvement, it’s hard to predict. As we said it before, if you are averse to risk, then it’s probably a wise decision to take action and lock a rate these days. The Fed is expected to hike rates this year, and whenever that happens, mortgage rates will rise accordingly. On the other hand, if you believe you can handle some more risk and expect that the situation in the European economy, and especially in Greece gets worse, the global economy goes into a recession, you may better wait and see if rates start falling.
As far as tomorrow’s economic reports are concerned, three pieces of data set to be released, including the Philly Fed’s Survey for May, new data on Existing Home and the upcoming Markit Flash PMI. On Friday, we will get new data on Consumer Price Index. With the market closing earlier on Friday due to the upcoming holiday, we don’t anticipate that this last piece of data will have much of an impact on bond market movements.
Switching to current mortgage rates this Wednesday at top lenders, Wells Fargo (NYSE:WFC) is offering the 30-year fixed mortgage loan for home purchase or refinancing for as low as 4.125%, the latest data showed. The bank’s 15-year conventional mortgage is available at a rate of 3.375%.
Moving on to today’s home loan rates at Chase (NYSE:JPM), the standard 30-year FRM is coming out at a rate of 3.875%. Borrowers, who are interested in locking the 15-year version of the bank’s home loan, can expect to pay 3.125% interest cost. As far as refinancing is concerned, the benchmark 30-year home refinance mortgage is quoted at a rate of 4.000%. The shorter-term, 15-year FRM demands 3.250% interest.
Over at Bank of America (NYSE:BAC), the 30-year home purchase mortgage can be obtained at a rate of 3.875%, according to our observations. Others, who opt for the 15-year FRM, may be able to secure it at 3.000%. In case of home refinancing, BofA’s long-term 30-year FRM is offered today for as low as 4000.%. Those, who find the 15-year refinance loan a more appealing alternative, can expect to pay 3.000% interest cost.
The above mentioned interest rates are subject to change and are not guaranteed. In order to search for live mortgage rate quotes from some of the top U.S. lenders, please click on the link below. To calculate your monthly mortgage payment, feel free to use our featured mortgage calculator.