Current Mortgage Rates Roundup for June 14, 2015: What to Expect from the Week Ahead?

Mortgage rates caught a break on Friday, but remained near 2015 highs, as lenders remained conservative with revising their rate sheets. While Thursday and Friday brought some positive changes for mortgage rates, as they regained at least a fraction of the ground they lost a week earlier, the majority of lenders haven’t carried out major changes to their rate sheets. A sentiment toward higher interest rates and extreme market volatility, that we have been experiencing in the last couple of weeks, could be among the reasons why lenders haven’t made any agressive repricing in the last two days of the week.

National mortgage rates continued to rise last week, with the 30-year fixed mortgage crossing the 4% threshold, averaging 4.04%, according to Freddie Mac’s weekly survey. This is the highest rate for the aforementioned loan in the last eight months. The federal agency’s latest Primary Mortgage Market Survey (PMMS) revealed, that the current mortgage rate on the 30-year FRM is 17 basis points higher compared with data from a week earlier. The average interest rate on the 15-year fixed mortgage loan spiked as well, finishing the week at 3.25%, a sharp increase compared with the prior week’s data.

Current Mortgage Rates Roundup for June 14, 2015

It should be no surprise to anyone that ongoing events in Europe have been impacting U.S. mortgage rates these days. Back on Thursday, news surfaced that negotiations between Greece and its international creditors broke down over the country’s debt payment. Following the news, pricing on mortgage-backed securities (MBS), which most directly influence mortgage interest rates, improved. In the upcoming week, Greece and its creditors are heading for a showdown on Thursday, and any outcome of the meeting can have an impact on financial markets, and indirectly on U.S. mortgage rates. The general consensus is that Greece will manage to strike a deal with its creditors until the end of June, in order to avoid defaulting on their debt.

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Besides the Greek debt talks, the upcoming week’s economic calendar includes another very important event in the form of June’s FOMC meeting and Fed Chair Janet Yellen’s press conference, which are going to take place on Wednesday. Investors and traders will be closely watching the outcome of the Fed’s meeting and Yellen’s press conference for clues and guidance on the U.S. central bank’s planned rate hike. Analysts are wondering if there’s going to be any change in the Fed’s language regarding rate hike, considering the better-than-expected econonic data released last week.

Although, the latest NFP employment report, retail sales data, consumer sentiment index and job openings data signal a healthy rebound in the second quarter, a lift in interest rates in June is highly unlikely. The reason why a rate hike in June is seemingly off the table, is that U.S. central bank officials want to see evidence of a rebound in growth to be certain that the economy is back on track.

While the Fed repeatedly said that they expect to raise short-term interest rates this year, the precise timing of the tightening is unknown. Recently, some Fed officials stressed that that the timing of the initial rate hike is less important than the pace of subsequent moves, suggesting that a raise in interest rates could be gradual moving forward. Currently, the consensus expectation is that the lift in rates will take place in September. However, a recent survey by Bloomberg News revealed, that 40 percent of economists believe that the Fed will hike rates beyond September, if the job market doesn’t show further improvements and inflation target levels aren’t met.

All in all, the Fed’s statement on the economic outlook could greatly impact markets, which could improve or hurt mortgage rates. And the same can be said about Greece’s debt negotiations, so theses are two major events in the week ahead to keep an eye on.

As far as the upcoming week’s domestic economic data is concerned, we will get a new report on U.S. industrial output on Monday. Economists are projecting a 0.2% increase for May’s U.S. industrial output, following five consecutive months of contraction.

Another economic report on Monday will come in the form of June’s Empire State Manufacturing Index. Following a disappointing reading in May, economists are expecting a modest pickup in June for the New York region manufacturing activity.

Moreover, the week ahead will bring us some new data on the current state of the nation’s housing market. The NAHB Housing Market Index for June is set to be released on Monday and the consensus expectation is a jump to 56 compared with 54 in the prior month. Another housing data is due to be released in the upcoming week, which will reveal the pace of housing starts in May. According to economists’ forecast, housing starts fell 3.3% last month, following a dramatic 20.2% surge in April.

On Thursday, the Consumer Price Index for May will be released by the Labor Department. Analysts are expecting an increase of 0.7% month-over-month for May’s CPI. On the other hand, the core CPI, which excludes food and energy prices, increased a moderate 0.2% last month, according to the latest projections.

The Philly Fed’s Manufacturing Index for June will see the light of day on Thursday. May’s reading missed the consensus expectation of 7.5, coming in at 6.7. For June’s data, economists expect a reading of 8.0.

As several important economic reports are going to be released in the coming days, it should be an interesting week for mortgage rates. However, we believe that the FOMC meeting on Wednesday and Greece’s ongoing debt talks will take the center stage during the week, which could have the biggest impact on markets and eventually on mortgage rates.

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