For all intents and purposes, mortgage rates have not changed this week. More pointedly, rates have changed very little since the beginning of the month. The last two Primary Mortgage Market Surveys from Freddie Mac have shown the average rate on a 30-year fixed-rate mortgage to be 3.59% and 3.58% with 0.5 points. Looking at things from a broader perspective, rates have generally trended downward since the beginning of the year. The first PMMS of the year had rates at 3.97%. Rates dipped at the end of January, and since that time have fluctuated between 3.73-3.58%. This is pretty much a long way of saying that rates have been pretty stable for the past few months, leaving aside typical day-to-day volatility. Treasury yields dipped very briefly Sunday night/Monday morning when oil prices spiked. Oil prices promptly rebounded, and yields came back to where they were. Yields on 10-year Treasuries have been fluctuating around 1.77% for a week.
The bond markets seem to be in a holding pattern waiting for the Fed to act, and in the meantime, they are reacting to overseas influences, swings in energy prices, and perceptions about the Fed’s intentions. Basically, the same stuff we’ve been talking about for months.
Click here to get today’s latest mortgage rates.
Today’s economic data:
Some relatively boring data for what’s shaping up to be a boring week:
- Existing home sales rose by 5.1% from February to March, with sales hitting a seasonally adjusted annual rate of 5.330M. The consensus expectation was for a SAAR of 5.268M. Existing home sales are up 1.5% year-over-year.
- The EIA’s Petroleum Status Report showed an increase in crude oil inventories, but less of an increase from last week.
I told you it was boring. The data seems to be having no discernible impact on the market, which is a theme of late.
Miscellany:
As you may have intuited from the opening paragraph – there’s simply not a whole lot to discuss that we haven’t already discussed here ad nauseum in the past weeks and months. There’s a Fed meeting next week, and I don’t think there is any expectation that we will learn anything new after that meeting. The implied probability of a hike based upon the Fed Fund futures prices is just 1%. As of right now, there’s only a 20% probability of a hike in June, and a 57% probability of a hike by the end of the year. My gut instinct is that we will see a “credibility-preserving” hike sometime in the second half – almost regardless of the data, assuming it doesn’t really go into the tank. We’ll have plenty of time to pore over the Fed statement next week, no need to belabor the point now.
And now, a series of things that either interest me, or may have some bearing on mortgage rates that don’t really warrant their own section:
- Oil prices, which have moved around quite a bit of late, are falling again, apparently due to the end of a three-day oil-worker strike in Kuwait. This follows the failure of a group of oil producing companies (basically OPEC plus Russia and a few others) to agree to freeze output. The failure to freeze output really boiled down to a disagreement between Iran and Saudi Arabia – something that should have surprised absolutely nobody.
- At some point, likely in the near future, marijuana will be legalized in this country. Whatever your feelings on the topic (personally, I think the war on drugs has been the biggest policy failure/waste of money in this country for the past 50 years or so), it seems inevitable. And if you don’t think that the big tobacco companies are ready to capitalize on the opportunity, I have a bridge to sell you. Great article from Bloomberg this morning that speaks to this point: “Big Tobacco’s Pot of Gold,” written by Tara LaChappelle and Rani Molla.
- The June 23rd “Brexit” referendum fast approaches. As of now, the polls show 44% of voters opting to stay in the EU, and 42% of voters opting to leave. The ramifications of a Brexit are much debated. I’m not in a position to opine, but I will say this – it’s certainly not quelling the atmosphere of uncertainty that surrounds the global economy right now.
- Hillary Clinton and Donald Drumpf both rolled in New York last night. A few (possibly obvious) questions arise: Will Bernie Sanders throw his support behind Hillary in the general election? Will his supporters show up at the polls? Will Drumpf get to 1,237 delegates before the Republican convention? If he gets close (which is a virtual inevitability) but doesn’t hit the threshold, and the Republican establishment nominates Cruz, what kind of mayhem will break loose in Cleveland in June? It’s not going to be pretty – I’m thinking a 1968 Chicago redux.
- As a Red Sox fan, headlines like this warm the cockles of my heart: “Jacoby Ellsbury playing like a $153 million disappointment.” $21 million per year through 2020.
- A fun website I discovered recently: Beergraphs. They’re trying to apply metrics to beer, a la Fangraphs. I enjoy the “Beers Above Replacement” measure.
Some food for thought, hopefully, on a slow day.
Don’t wait for rates to rise. Start your mortgage process now.
What’s the takeaway for rates?:
There’s only so many ways to say this: rates are close to the lows of the year. They’ve been low for a while now. It’s definitely a favorable time to look into refinancing your home or purchasing a new one. There is some risk that rates could rise next week if the Fed adopts a hawkish stance in its meeting. I think this is unlikely, but it’s a possibility worth noting.
Don’t wait for rates to rise. Start your mortgage process now.
Notable events this week:
Monday:
- Fedspeak
Tuesday:
- Housing Starts
Wednesday:
- Existing Home Sales
- EIA Petroleum Status Report
Thursday:
- Philly Fed Business Outlook Survey
- Weekly Jobless Claims
Friday:
- PMI Manufacturing Index Flash
from Total Mortgage Underwritings Blog http://ift.tt/1Strskw
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