Welcome to the TMS current mortgage rates blog. There’s some economic news out today, but first, your mortgage rate forecast/advice.
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Where are mortgage rates going?
Fed Minutes prop up chances of a June rate hike
The Federal Open Market Committee released the minutes of the April 26-27 meeting yesterday, and the markets are all aflutter because they feel that a June rate hike is now back on the table. Does that mean they will actually follow through with it? Absolutely not. But they certainly do seem to be talking the talk.
The line that really hit home stated that:
Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June.
There’s been plenty of Fedspeak the past few weeks about the possibility of a June hike, but this is by far the clearest signal from the Fed thus far.
Personally, I side with Tim Duy on this one and still think that a rate hike in June will most likely not happen. While the data coming out has been stronger than the beginning of the year, there’s only so much time and data left between now and the June meeting. Everything would have to align perfectly in order to have complete confidence that higher rates would be the correct decision.
It’s also hard to imagine that the Fed would want to risk disturbing the markets before Britain’s vote to leave the European Union.
I know that they claim they’re a “data dependent” bunch that make decisions objectively based on the numbers, but the reality is that politics comes into play, and I think that, barring incredibly robust data, the Fed will err on the side of caution, and push the rate hike further down the road. Janet Yellen knows that if Donald Trump somehow wins the election, she’s out of a job, so if she ruffles too many feathers in the coming months, that works against the Democratic party that selected her.
Richmond Fed President Jeffrey Lacker said this morning that the Brexit should not play into a delay in raising rates. He might be right but I think the reality is that it will be on the minds of voting members of the FOMC.
The Fed Fund futures has been influenced by the noise coming out from the Fed recently and been adjusting in favor of a rate hike happening soon. Earlier this month, the chance of a June rate hike had gotten to as low as 3%. At the beginning of the day yesterday, it was at 19%. Right now, it’s at 34%. Those are by no means great odds, but they are certainly better than 3%. July, September, November, and December are at 54%, 68%, 70%, 80%, respectively.
Freddie Mac PMMS has rates up
According to the latest Freddie Mac Primary Mortgage Market Survey, rates went up just a touch this week. The average rate on a 30-year fixed rate is 3.58% (0.6 points), the average rate on a 15-year fixed is 2.81% (0.5 points), and the average rate on a 5-year ARM is 2.80% (0.5 points). The 30-year fixed is only 1 basis point up from the 3-year low it hit last at 3.57%. Data for the survey is, however, collected earlier in the week and won’t have yesterday’s spike factored in.
Don’t wait for rates to rise. Start your mortgage process now.
What does this mean for me?
Mortgage rates might have gone up this week but they’re still at historically low levels. If you’ve been thinking about purchasing a home or refinancing your current mortgage, you’re almost definitely better off acting sooner rather than later.
Click here to get today’s latest mortgage rates.
Today’s economic data:
Weekly Jobless Claims are down
According to data out from the Labor Department, jobless claims dropped 16,000 to 278,000 this week. However, the 4-week moving average rose 7,500 to 286,250.
Philly Fed Business Outlook Survey in the negative
The Philly Fed index came in at minus 1.8% in May. The weakening dollar and rising energy prices have yet to make their mark on the factory sector.
Don’t wait for rates to rise. Start your mortgage process now.
Notable events this week:
Monday:
- Empire State Manufacturing Survey
Tuesday:
- Consumer Price Index
- Housing Starts
- Industrial Production
Wednesday:
- EIA Petroleum Status Report
- FOMC Minutes
Thursday:
- Weekly Jobless Claims
- Philly Fed Business Outlook Survey
Friday:
- Existing Home Sales
from Total Mortgage Underwritings Blog http://ift.tt/1OPln3x
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