Mortgage rates increased in the beginning of the week, as global stocks rallied and commodities strengthened as well, while government bonds pulled back and they took mortgage-backed securities (MBS) with them for a ride. Pricing on MBS, which lenders use to determine daily interest rates, moved higher on Monday, and as a result, current mortgage rates are now close to those levels that we have seen last Thursday, ahead of the release of September’s big jobs report. While a number of market experts believed that the weaker-than-expected Non-Farm Payrolls data will continue to impact financial markets this week, and drive mortgage rates even lower, it seems that the exact opposite has happened. The bottom line is, that today’s mortgage rates are slightly less attractive compared to those rate levels on Friday, but rates still remain close to 5-month lows.
During Monday’s trading session, the yield on the benchmark 10-year treasury note rose by 8 basis points to 2.07%, the biggest daily increase since September 21 . As mortgage rates tend to follow the movement of the 10-year treasury bond, you may see slightly higher mortgage interest rates at your lender today. The average lender which quoted the 30-year fixed mortgage rate at 3.75% on Friday, now offers the same type of conventional loan at a rate of 3.875%, according to our observations. With regards to the longer-term, 30-year treasury yield, it finished yesterday’s trading at 2.90%, an uptick of 8 basis points compared to Friday’s data.
On Tuesday morning, MBS looks flat, but government bonds have been on the decline for the second straight trading session. If this trend doesn’t change during the trading session, we may see slightly higher mortgage rates at the end of the day. While Friday’s disappointing jobs report has made mortgage rates more attractive, it also bolstered expectations that the Federal Reserve will continue its ultraloose monetary policy until the end of 2015. And this has encouraged investors to move away from fixed-income securities and buy riskier assets, such as stocks.
Investment banking giant, Goldman Sachs now sees a chance that the Fed will take a pass on raising short-term interest rates this year. Although, a rate hike in December is still the investment bank’s central forecast, a slowdown in employment, low inflation and tight economic conditions may eventually force the Fed to hold off on raising short-term rates this year.
According to the CME Group FedWatch, which is used by investors and traders to predict future central bank policy, the market now sees a 5% chance for an October rate hike, down from 24% a month earlier, while the probability of a monetary tightening in December is currently 34% compared with 44%, that it had before the release of September’s NFP report.
No influential domestic economic data is scheduled for release today, so financial markets will take their cue from stocks and overseas events, and these could be factors, when it comes to mortgage rate movement as well. Later today, San Francisco Fed President John Williams is scheduled to speak about the U.S. economic outlook, and it will be interesting to hear his thoughts about the Fed’s monetary policy in the light of Friday’s poor jobs data. A week ago John Williams said in remarks prepared for a gathering at the UCLA Anderson School of Management, that he believes the U.S. central bank should start raising rates before year-end.
Moving on to today’s mortgage rates at some of the top U.S. lenders, at Bank of America (NYSE:BAC), the 30-year fixed conventional home loan is now quoted at a rate of 3.750%. The 15-year home purchase loan, which comes with a fixed interest rate during the term of the mortgage, is coming out at 2.750% this Tuesday. Looking at more flexible home loan options, BofA’s 7/1 ARM is currently available at a rate of 2.750%, while the 5/1 ARM is up for grabs at 2.500%. Looking at the lender’s non-conventional mortgage packages, the 30-year FHA home loan can be secured for as low as 3.750% on Tuesday.
Refinance rates also look attractive at BofA today, with the 30-year FRM now hovering at 3.875%, according to our observations. Borrowers, who prefer to refinance over a shorter-term, may want to opt for the 15-year fixed mortgage plans, as they start a rate of 2.875%. The lender’s home refinancing options also include FHA mortgages, and currently the 30-year FHA refi loan could see balances cleared at 3.750%.
Over at San Francisco, CA-based top mortgage lender, Wells Fargo (NYSE:WFC), the 30-year home purchase mortgage can be locked in for as low as 4.000%. The bank is offering the shorter-term, fixed-rate home mortgages as well, such as the 15-year FRM. This type of conventional loan is currently starting at a rate of 3.250%.
Turning focus to Wells Fargo’s refinance rates today, the standard 30-year fixed mortgage is quoted at a rate of 4.000% at this lender. On the other hand, the popular 15-year fixed refinance rate doesn’t look bad either, as it stands at 3.250% as of this writing.
At another established mortgage loan provider, Chase (NYSE:JPM), current home loan options include the benchmark 30-year conventional mortgage, which can be obtained at a rate of 3.625% this Tuesday. Those looking for shorter-term loan alternatives, may find the 15-year fixed home loan a more appealing option, as it starts at 3.000% at this bank.
According to the latest mortgage rate information, Chase’s 30-year fixed-rate home refinance loan is now quoted at 3.875%. In case of the 15-year FRM, qualified borrowers can expect to pay 3.125% 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.