Mortgage rates remained roughly unchanged on Friday, amid expectations that the U.S. central bank will begin tightening monetary policy at the upcoming FOMC meeting in December. While mortgage interest rates declined slightly on Friday morning, the gains quickly evaporated in the afternoon, following weakness in the bond market. As a result mortgage lenders repriced for the worse and issued rate sheets with higher mortgage interest rates in the afternoon. However, later on rates bounced back, which leaves current mortgage rates close to those levels we’ve seen on Thursday. Borrowers, who are looking to secure the benchmark 30-year fixed mortgage rate these days, can expect to pay an interest cost in the range of 4.000% – 4.125%, as these are the most prevalently quoted rates among the majority of lenders.
As far as U.S. government bonds are concerned, the benchmark 10-year treasury note closed Friday’s trading session at a yield of 2.26%, up by 2 basis points compared to data from a day earlier. The 10-year treasury bond is one the best indicators when it comes to determining whether mortgage rates rise or fall. As mortgage rates typically follow the movement of 10-year treasury bonds, you may see slight changes in interest rates at some lenders compared to Thursday’s levels, however the changes are rather marginal in most cases. With regards to the 30-year treasury note, the yield on this type of bond increased by 2 basis points to 3.02% on Friday.
Switching to national mortgage rates, McLean, VA-based government-sponsored enterprise, Freddie Mac reported on Thursday, that the average rates on the 30-year and 15-year fixed loans leveled off in the week ended November 19. According to the federal agency’s latest weekly Primary Mortgage Market Survey (PMMS), the current average rate on the 30-year fixed mortgage is 3.97% nationwide, an improvement of 1 basis point compared to the previous week’s data. The average rate on the 15-year fixed mortgage rate declined 2 basis points to 3.18% this week, Freddie Mac’s data showed.
A regional breakdown of the mortgage-buyer’s PMMS survey revealed that the highest average interest rate on the 30-year fixed mortgage was measured in the Northeast, Southeast and Southwest regions, where this type of conventional loan averaged a rate of 3.98% this week. The survey also showed, that the lowest average rate was measured in the Western region. In this region the current mortgage rate on the 30-year fixed conventional loan is 3.94% on average.
The key market driver of the week was the Minutes from the Fed’s October meeting, which got released on Wednesday. The Minutes showed, that U.S. policymakers were nearly ready to hike rates in October. According to the Minutes, many of them believe a liftoff in short-term rates would be appropriate at the December FOMC meeting. While it seems that the U.S. central bank is strongly leaning towards a rate hike next month, market participants are concerned about the pace of the hike.
As we reported this week, several Fed members expressed their views on the U.S. central bank’s monetary policy. Atlanta Fed President, Dennis Lockhart said this week at an event in New York, that he is reasonaly satisfied that financial market volatility issues have settled down since October and the labor market continued to improve in recent months, thus he is „comfortable with moving of zero soon,”.
Another Fed official, Cleveland Fed leader, Loretta Mester said at the same event, that she believes the U.S. economy is now strong enough to bear a rate increase.
Meanwhile, Richmond Fed President Jeffrey Lacker made some hawkish comments this week in an interview with CNBC, saying that the Fed should begin moving away from zero interest rate policy at the upcoming FOMC meeting next month.
Dallas Fed President, Rob Kaplan, who won’t be a voting member of the Fed’s policy-setting committee until 2017, also chimed in this week with his opinion on future monetary policy. Kaplan believes that leaving rates near zero for too long could pose a risk to the economy. He added, that the return to normal interest rates could be gradual.
The upcoming week is going to be a holiday-shortened one, as financial markets will be closed on Thursday due to Thanksgiving, while stock markets close early, at 1 PM Eastern on Friday. The economic calendar in the week ahead will be packed with some new housing market data, as well as fresh reports on durable goods orders, personal income and spending, consumer sentiment, second estimate on Q3 GDP and fresh reports on manufacturing activity.
As we mentioned this week, currently it’s widely expected that the Fed will begin tightening monetary policy next month. Whether the rate hike is already priced into bonds or not is anybody’s guess at this point, however, we anticipate that whenenver the liftoff happens mortgage interest rates will rise accordingly. So if you are in the process to get a mortgage in order to buy a new or used home or to refinance an existing loan, we advise borrowers to strike while the iron is hot.
In order to search for live mortgage rate quotes from some of the top U.S. lenders, please click on the link below.