Current Mortgage Rates Roundup for January 12, 2017

Mortgage rates decreased on Wednesday, while U.S. treasuries rallied across the board, as President-elect Donald Trump offered scant details on future fiscal policies, that spurred demand for government bonds. Moreover, yesterday’s 10-year government bond sale drew stellar demand from investors, which helped pushing mortgage rates lower. As a result, 30-year and 15-year fixed mortgage rates headed lower, however, at the majority of lenders the gains can be seen in lower upfront costs as opposed to lower contract rate. The most prevalently quoted rate on 30-year fixed mortgages remains at 4.125%, according to our observations.

As far as U.S. government bonds are concerned, the benchmark 10-year treasury note closed yesterday’s trading session at a yield of 2.38%, unchanged since Monday. The 10-year government note is one the best indicators when it comes to determining whether mortgage rates rise or fall. When the yield on 10-year treasury bonds falls, mortgage rates usually drift lower. In case the 10-year treasury yield surges, mortgage interest are usually trending higher as well. Looking at the 30-year treasury note, the yield on this type of bond ticked down by 1 basis point to 2.96% on Wednesday.

This morning mortgage-backed securities (MBS), that typically set the tone for mortgage rates, are looking in better shape. If they stay in the green and the bond market continues yesterday’s rally, interest rates on mortgage loans could see more improvements later today.

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Current mortgage rates are lower nationwide compared to interest rates a week earlier, according to McLean-VA based federal agency, Freddie Mac’s latest weekly Primary Mortgage Market Survey (PMMS) released on Wednesday. The mortgage-buyer’s latest survey showed, that the average interest rate on the 30-year fixed conventional loan improved to 4.12% in the week ended January 12, versus 4.20% a week earlier. At this time last year, the 30-year FRM averaged 3.92%.

According to Freddie Mac’s PMMS survey, on average lenders were offering 15-year fixed mortgages at a rate of 3.37% in the past week. This marks a 7 basis points decline compared to rates in the prior week. The same time a year earlier, the average rate on the 15-year fixed loan was hovering at 3.19%.

Rates on adjustable-rate mortgages (ARMs) are lower as well. Currently, the average rate on the 5-year ARM is clinging at 3.23%, down from the previous 3.33% it carried in the prior week. At this time a year ago, the 5-year ARM averaged a rate of 3.01%.

Today’s domestic economic headlines include fresh data on jobless claims. The number of Americans filing for unemployment benefits increased by 10,000 to a seasonally adjusted 247,000 in the week ended January 7. The consensus expectation was for a reading of 255,000. Jobless claims are below the 300,000 threshold for 97 consecutive weeks now, the longest stretch since 1970, which indicates a fairly robust, healthy labor market.

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Another important economic data that saw the light of day is the December import and export price indexes. U.S. import prices climbed 0.4% last month, following an upwardly revised 0.2% decrease in November, the Labor Department said. On the other hand, export prices advanced 0.3% in December, after retreating 0.1% a month earlier.

This Thursday brings us a lot of Fedspeak, which may shed some light on the U.S. central bank officials’ thinking regarding future monetary policy. Earlier today, Philadelphia Fed President Patrick Harker said in prepared remarks in Malvern, Pennsylvania, that „the economy is displaying considerable strength” and three rate hikes could be appropriate, assuming the economy stays on track. Harker’s forecast is in line with the majority of U.S. policymakers at the central bank.

As we reported Tuesday, another top Fed official, Boston Fed President Eric Rosengren called for „somewhat more regular interest rate hikes” in a speech to business leaders earlier this week. The exact timing of rate increases depends on incoming economic data, international conditions and fiscal policy, according to Rosengren.

The list of other Fed officials, who are going to make public appearances today includes Chicago Fed President Charles Evans, Atlanta Fed CEO Dennis Lockhart and St. Louis Fed Chief James Bullard. Investors will also be watching Fed Chairwoman Janet Yellen for guidance on interest rate increases this year, who will hold a speech Thursday night.

Currently, all things point to a couple of rate hikes later this year, which means that borrowers, who are looking to get a new mortgage and want to avoid the possibility of higher mortgage interest rates, may want to consider locking a rate sooner rather than later.