Mortgage rates ended last week roughly in line with Thursday’s rate levels, amid concerns that the Federal Reserve may decide to raise its key short-term rate at the December FOMC meeting. Following two straight days of bond sell-off, investors and traders flocked into ultra-safe fixed-income securities on Friday, and as a consequence pricing on government bonds increased. Mortgage-backed securities (MBS), which most directly influence interest rate movement, were in better shape as well, however, at most lenders mortgage rates didn’t seem to benefit accordingly. Currently, the average lender is quoting the 30-year fixed mortgage rate in the range of 3.875% – 4.000%. Although, mortgage interest rates experienced some increases during the past week, following the release of a hawkish Fed policy statement on Wednesday, current borrowing costs remain attractive for those looking to buy a new or used home or interested in refinancing an existing loan.
In the secondary market, the benchmark 30-year fixed treasury note closed Friday’s trading session at a yield of 2.16%, down 3 basis points compared to 2.19% a day earlier. As mortgage rates tend to follow the movement of the 10-year note, you may see slight changes in borrowing costs at your lender, but most likely those will effect closings costs or lender credit as opposed to the contract rate itself. The longer-term 30-year treasury yield finished the trading day at 2.96%, down 3 basis points compared to data on Thursday.
Long-term average mortgage rates eased nationwide last week, according to McLean,VA-based government-sponsored enterprise, Freddie Mac’s latest weekly Primary Mortgage Market Survey (PMMS). The mortgage-buyer’s data revealed, that the average interest rate on the 30-year fixed mortgage nudged lower by 3 basis points to 3.76% last week. The national average rate on the shorter-term, 15-year FRM remained unchanged at 2.98% in the past week, Freddie Mac’s survey showed.
A quick look at current average mortgages rates on flexible adjustable rate loans shows, that the 5-year ARM stayed frozen at 2.89% in the said period. On the other hand, the average rate on the 1-year adjustable rate mortgage surged by 8 basis points to 2.63% last week. When looking at this mortgage data, it must be noted, that the survey responses are collected in the first half of the week, so the final data doesn’t reflect those changes that impact mortgage rates later on during the week.
The week ahead is going to be packed with a slew of domestic economic data which will be watched closely by the Fed, as they may hold key to whether the U.S. central bank will lift rates for the first time in almost a decade. The highlight of the week is going to be October’s jobs report, which is set to be released on Friday. If the upcoming economic reports turn out better-than-expected, the recent uptick in mortgage rates may continue this week. However, if the majority of readings misses expectations, mortgage rates could be heading lower.
U.S. construction spending data for September is scheduled for release on Monday. Economists believe that construction spending likely increased 0.5% in September, following a 0.7% increase in August. Another economic report which is going to be released today is the ISM Manufacturing Index for October. According to analysts, manufacturing activity likely expanded lasth month, although the latest estimation points to a reading of 50.0, which would signal a slightly slower pace of expansion compared to 50.2 in September.
The upcoming factory orders data which covers the month of September will be released by the Commerce Department on Tuesday. Economists are projecting a decrease of 0.9% for September’s factory orders data. Back in August new orders for U.S. manufactured goods declined 1.7%.
During mid-week we will get fresh data on private sector employment in the form of the monthly ADP National Employment Report. According to forecasts, U.S. companies likely added 180,000 jobs last month. In September, ADP reported that 200,000 new positions were created.
The Insititute of Supply Management’s Non-Manufacturing Report on Business Index for October will come out on Thursday. Following a reading of 56.9 in September, activity in the U.S. service sector likely expanded at a slower pace at 56.3 in October, according to the latest estimations.
The number of initial claims for state unemployment benefits increased to 260,000 in the week ended October 24. Now, for the upcoming labour market data, which is set for release on Thursday, economists estimate that jobless claims likely remained unchanged.
On Friday, the Labor Department will release the most influential domestic economic data of the week, October’s Non-Farm Payrolls data. Back in September, non-farm payrolls increased by 142,000, missing expectations big time. For October’s jobs data, economists forecasts an increase of 180,000 non-farm payrolls.
U.S. consumer credit likely rose by $17.75 billion in September, according to the latest estimations. The Federal Reserve’s report on September’s consumer credit data will see the light of day on Friday.
So current mortgage rates have been on the rise since last Wednesday, however, we don’t anticipate a sharp increase in rates this week, unless the incoming economic data turns out significantly better-than-expected. Borrowers, should keep an eye on the upcoming jobs data on Friday, as it may have a big influence on market movements and it could impact mortgage rates as well. Furthermore, a strong employment report could also boost chances of a rate hike this year, provided that the rest of the economic reports between now and the December FOMC meeting point to a healthy economy, which is strong enough to handle a raise in short-term rates.
In order to search for live mortgage rate quotes from some of the top U.S. lenders, please click on the link below.