Mortgage rates held ground on Friday, as bonds bounced back, following the release of a weaker-than-expected construction data. Current mortgage rates are now very close to 8-month lows, that provides a golden opportunity to homeowners looking to save on their monthly payments with refinancing, as well as new buyers to lock in an ultra-low rate. The most prevalently quoted interest rate on benchmark 30-year fixed conventional mortgages is currently in the range of 3.875% – 4.000% nationwide, according to the latest market data.
In recent trading, pricing on long-dated treasury bonds remained firm. The yield on the 10-year treasury note, which is a bedrock of global finance, closed Friday’s trading session at 2.16%, the same yield as a day earlier. The longer-term, 30-year treasury bond finished the trading session at a yield of 2.78%, unchanged compared to Thursday’s data.
Pricing on mortgage-backed securities (MBS), which lenders use to determine daily mortgage rates, is slightly in the red in the beginning of the new week. If MBS pricing remains in negative territory, there’s a possibility that lenders might change today’s mortgage pricing for the worse.
30-year and 15-year fixed mortgage rates are slightly higher across the country, according to Freddie Mac’s weekly market survey. The Virgnia-based mortgage-finance company’s most up-to-date PMMS survey released Thursday showed, that the average rate on the standard 30-year fixed mortgage nudged higher by 2 basis points to 3.91% in the week ended June 15. On average, mortgage lenders were offering 15-year fixed conventional loans at a rate of 3.18% last week, which marks a 2 basis points increase compared to the previous 3.16% in the prior week. The federal agency’s latest survey also showed, that the average interest rate on the flexible 5-year ARM soared 4 basis points to 3.15% last week.
However, it’s important to note, that the federal agency’s survey was conduced before the release of a surprisingly weak CPI report. And that economic data had a major marketing moving impact, which resulted in a sharp drop in treasury yields. With that said, there’s a good chance that we will see lower mortgage rates in next week’s PMMS survey.
As widely expected, the Federal Reserve raised its benchmark lending rate for the third time in six months on Wednesday, which indicates that U.S. policymakers believe the economy is on solid ground. At last week’s FOMC meeting, the central bank hiked the federal funds rate by a quarter point, bringing it to 1.00%-1.25%. At the same time, the Fed maintained its outlook for one more rate increase in 2017, despite growing concerns over weak inflation. Moreover, the Fed announced plans in great detail, that it would gradually reduce its $4.5 trillion balance sheet, starting this year.
Following a busy week packed with significant economic data, and a key Fed event, the week ahead is going to be fairly light on meaningful economic reports. Market participants will turn their attention to Fed speakers this week, as a couple of top U.S. central bank members are scheduled to deliver comments and share their thoughts on monetary policy. Investors and traders will keep an eye on these Fedspeaks for more clues on future monetary policy moves in the light of last week’s Fed rate decision. New York Fed President William Dudley and Chicago Fed chief Charles Evans will kick off this this week’s Fedspeaks, as they are due to make public appearances later this Monday.
On the domestic economic data front, the National Association of Realtors will release May’s existing home sales report on Wednesday. Existing home sales for May likely dropped 0.7% to a seasonally adjusted 5.5 million units, according to the latest forecasts. Back in April, existing home sales declined 2.3% to a seasonally adjusted annual rate of 5.57 million units.
New home sales data for May will see the light of day on Friday. Economists believe that purchases of newly-built U.S. homes likely surged 5.5% to a seasonally adjusted annual rate of 600,000 units last month, following a 11.4% slide in April.
Additional economic reports slated for release this week include fresh readings on jobless claims, as well as Markit manufacturing and service sector indexes.
From a historical perspective current mortgage rates look very attractive, so if you are interested in getting a mortgage these days, this is certainly a good time to lock.