Mortgage rates headed slightly lower in the beginning of the week, as weak economic data prompted investors to flock into safe-haven assets. However, today’s mortgage rates doesn’t reflect the recent small gains in the bond market, with the improvements being so subtle. That leaves current mortgage rates near the lowest levels in 8 months. The most prevalently quoted rate on the 30-year fixed conventional loan remains at 3.875%, with some of the lenders offering this type of mortgage for as low as 3.875%, according to the latest data.
May’s durable goods report came out on Monday with some disappointing figures, registering the biggest drop in six months. Orders for long-lasting goods such as planes and computers tumbled 1.1% last month, following a decline in April, according to the Commerce Department’s data. Once the report broke, treasury yields fell immediately. The yield on the benchmark 10-year treasur note closed Monday’s trading session at 2.14%, down 1 basis point from a day earlier. The top-rated 10-year note has a strong correlation with mortgage rates. When the yield on the 10-year note falls, mortgage rates tend to head in the same direction. Similarly, when the 10-year treasury yield picks up, mortgage rates are often trending higher. The long-dated 30-year treasury bond finished the trading day 1 basis point lower at 2.70%.
On Tuesday morning pricing on mortgage-backed securities is slightly in the red. If MBS stays in the red, borrowers may see some negative adjustments in today’s mortgage rates.
While mortgage interest rates have been basically flat in the last few weeks, the potential for movement is in the cards this week, as a number of important economic reports are set to be released, including Q1 GDP revision, PCE inflation data amongst others, that have the potential to affect financial markets, and consequently rates as well. On top of that Fed Chairwoman Janet Yellen is due to take part in a discussion on global economic issues in London later today, which will be watched by investors and traders closely for hints on the timing of future rate hikes. Aside from the Yellen speech, Tuesday will bring commentary from a handful of other top U.S. policymakers, including Philadelphia Fed President Patrick Harker, as well as Minneapolish Fed chief Neel Kashkari.
A hawkish stance from Yellen and other Fed officials on the outlook of U.S. monetary policy – in the light of the recent patch of weak inflation data – could potentially put an upward pressure on mortgage rates. A more dovish tone from the central bankers, on the other hand, could see interest rates heading lower.
On the economic data front, two pieces of domestic reports are due to be released this Tuesday. U.S. home price growth decelerated in April, according to the latest S&P/Case-Shiller Home Price Index released earlier today. The home price index rose 5.5% nationwide year-over-year in April, which is slightly lower than the 5.6% increase in March. As far as the 20-city index is concerned, it soared 5.7% from a year earlier, down two ticks from the 5.9% annual gain registered in March.
The Conference Board’s Consumer Confidence Index for June came out at 118.9, exceeding expectations of a 117.6 reading. Back in May, consumer confidence was at 117.9. Americans were more optimistic about the economy’s short-term outlook this month and were more upbeat about conditions in the job market as well.
A quick look at current mortgage rates on Zillow Mortgages shows that interest rates remained unchanged across the board during the wraparound week ended Tuesday. The interest rate on the standard 30-year fixed mortgage is currently 3.67% on Zillow Mortgages, the same rate as a week earlier. On the other hand, the 15-year fixed mortgage averaged a rate of 2.95%, while the 5/1 ARM came out at 2.97% in the wraparound week ended Tuesday.
A regional breakdown of current mortgage interest rates shows that in California, the 30-year fixed mortgage rate is now up 1 basis points to 3.68%, compared to data in the prior week. According to Zillow, the highest mortgage rate on the 30-year fixed mortgage was measured in New York state (3.79%). The company’s data also showed, that the lowest mortgage rate on the 30-year fixed conventional loan was measured in Utah during this period, with the average rate coming out at 3.59%.