Mortgage rates declined to their lowest level in March, as stocks fell, while treasury prices gained during Tuesday’s trading session. Investors flocked into safe-haven assets yesterday, bumping up pricing on treasury bonds, as concerns over economic growth and the Trump adminstration’s upcoming fiscal reforms have increased. Mortgage interest rates are on a downward path since the Fed announced last week that it plans to increase the federal funds rate twice more this year. Some market experts had been expecting a more hawkish stance from the Fed, that it will accelerate the tightening cycle. Instead, the U.S. central bank stuck to original outlook to hike two more times in 2017.
The benchmark 10-year U.S. treasury note closed the trading day at a yield of 2.43%, the lowest yield this month. The current yield on the 10-year note is now 17 basis points lower compared to data from a week earlier. As mortgage interest rates tend to follow in on the footsteps of the 10-year treasury yield, current mortgage rates are lower, than those in the beginning of the week. However, at several lenders, most of the recent improvements can be seen in lower closings costs, instead of lower contract rate.
This Wednesday morning pricing on mortgage-backed securities is in the green, following the release of some weaker-than-expected economic data (more details on that later). If MBS stays in the green, borrowers may see some improvements in today’s mortgage rates.
Back on Tuesday, several top U.S. policymakers were scheduled to speak about the economy as well as monetary policy. Cleveland Fed head Loretta Mester told to reporters at an event in Richmond, Virginia that currently she sees more than three rates hikes to take place this year. According to Mester, who is considered as one of the more hawkish Fed members, three or more rate increases in 2017 would put the U.S. central bank in a „good shape”. The top policymaker also said, that if the economy stays on track, than it would be appropriate to take steps to begin shrinking the central bank’s $4.5 trillion balance sheet.
At a separate event on Tuesday, Kansas City Fed President Esther George said, that currently the central bank sees an opportunity to remove some monetary stimulus measures. According to George, who participates in the Fed’s monetary policy discussions but isn’t a voting member of the policy-setting committee this year, „The Federal Reserve is moving into what I consider a very critical time,”.
Moving on today’s domestic economic headlines, the National Association of Realtors released February’s existing home sales data. The latest data from the NAR showed, that existing home sales fell from a 10-year high last month, amid a tight inventory, rising home prices and mortgage rates, signaling a declining confidence in the economy. Existing home sales dropped 3.7 percent to a seasonally adjusted annual rate of 5.48 million units in February. The pace of sales in January was left unchanged at 5.69 million units. Economists had projected sales tumbling 2% to a seasonally adjusted annual rate of 5.57 million units in February, so the current reading is well-below expectations.
As far as current mortgage rates are concerned, financial company Zillow disclosed its latest mortgage information for the week. According to Zillow’s data, mortgage rates ticked down across the board during the wraparound week ended Tuesday. The interest rate on the standard 30-year fixed mortgage decreased 11 basis points to 3.99% on Zillow Mortgages in the said period. On the other hand, the 15-year fixed mortgage averaged a rate of 3.17%, while the 5/1 ARM came out at 3.01% 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 down 12 basis points to 3.97%, compared to data in the prior week. According to Zillow, the biggest weekly decrease in 30-year fixed mortgage rates took place in Pennsylvania and Texas states. In both states the average rate on the 30-year FRM improved 13 basis points. The company’s data also showed, that the lowest mortgage rate on the 30-year fixed conventional loan was measured in Texas during this period, with the average rate coming out at 3.96%.