Happy Friday, and welcome to the TMS current mortgage rates blog. There’s some economic data out today, but first, your daily mortgage rate forecast/advice.
Click here to get today’s latest mortgage rates.
Where are mortgage rates going?
Yesterday, the Freddie Mac Private Mortgage Market Survey (PMMS) showed that mortgage rates had fallen since the previous week’s report. The average rate on a 30-year fixed rate mortgage dropped by 2 points to 3.44% (0.6 points); the average rate on a 15-year fixed rate mortgage fell 1 point to 2.76% (0.5 points); and the average rate on a 5-year ARM slipped 2 basis points to 2.81% (0.4 points).
With no important economic data out today, it seemed as though we would head into the weekend without much fuss. What no one knew was that the dovish Boston Fed President Eric Rosengren would come out early this morning and spook the markets with talk about a September rate hike. Speaking before the South Shore Chamber of Commerce in Quincy, Massachusetts, Rosengren said “risks to the forecast are becoming increasingly two-sided”, fearing that a prolonged low rate environment could cause the U.S. economy to overheat.
Click here to get today’s latest mortgage rates.
He went on to say that:
“If we want to ensure that we remain at full employment, gradual tightening is likely to be appropriate…. A reasonable case can be made for continuing to pursue a gradual normalization of monetary policy.”
After some soft data was released this week, financial market participants seemed to be accepting the fact that a September rate hike was not in the cards. Now, Rosengren has single handedly caused a complete reversal of expectations. Yesterday, the Fed Fund futures has the chance of an increase in the federal funds rate at the September meeting at 15%; right now, it’s at 30%. November tells a similar story. It went from 21% yesterday to 31% today. And December now has over a 60% chance of a rate hike. These are the highest odds we’ve seen in weeks.
The real question remains: does this actually change anything? It’s not the first time that a Fed official has spooked the market into thinking that a rate hike is coming, and I’d bet everything I had that it won’t be the last. Personally, I think that September is off the table. While the risk of overheating might be increasing, the data still doesn’t firmly suggest that the economy can currently handle a rate hike. The last thing the Fed wants to do is raise rates and have the whole thing backfire. We’re less than two months from the presidential election and I just can’t see Fed officials trying to ruffle any feathers before that dust settles.
Despite what might or might not happen in a couple weeks, conditions are changing right now. The yield on the 10-year U.S. treasury note has risen by its highest margin in a month. It has surged over 12 basis points from where it was on Thursday morning. Fed jawboning, rising oil prices, and the ECB leaving interest rates unchanged has all played into the government bond selloff. Mortgage rates typically follow the lead of the 10-year yield so they’re headed higher as we go into the weekend.
Click here to get today’s latest mortgage rates.
What does this mean for me?
Mortgage rates are on the rise but they are still not too far from all-time record lows. There is a decent amount of Fedspeak on Monday, and that could put more pressure on mortgage rates. It could also take some off. Every situation is different, but if you have the time to spare, I would wait until we hear from those Fed officials to make any decisions. It’s very possible that we lose the gains we’re seeing today next week.
Click here to get today’s latest mortgage rates.
Today’s economic data:
Fedspeak
- Boston Fed President Eric Rosengren spoke this morning at 7:45am.
- Rob Kaplanwill speak at 9:45am and again at 8:15pm.
Notable events this week:
Monday:
- Labor Day
Tuesday:
- ISM Non-Mfg Index
- Fedspeak
Wednesday:
- Fedspeak
- JOLTS
- Beige Book
Thursday:
- Jobless Claims
- EIA Petroleum Status Report
Friday:
- Fedspeak
from Total Mortgage Underwritings Blog http://ift.tt/2bXHQZA
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