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Where are mortgage rates going?
Mortgage Rates up in Freddie Mac PMMS
The Freddie Mac Primary Mortgage Market Survey (PMMS) got released at 10am this morning and it revealed some more incongruity between mortgage rates and the 10-year yield.
- The average rate on a 30-year fixed rate mortgage rose one basis point to 4.16% (0.5 points).
- The average rate on a 15-year fixed rate mortgage rose two basis points to 3.37% (0.5 points).
- The average rate on a 5-year adjustable rate mortgage fell two basis points to 3.16% (0.4 points).
Typically, mortgage rates follow closely behind the 10-year yield. However, the 10-year yield fell nearly ten basis points (one basis point = 0.01) since last week. It’s a very unusual situation for these two rates to be traveling in different directions. The deviation began last week and with it continuing this week, it makes it one wonder how long it will persist. The answer could be for a while. There’s just so much uncertainty right now in both domestic and global markets, and until a clear path emerges the markets are likely to be volatile.
Uncertainty in FOMC Minutes
The big news yesterday was the FOMC minutes from three weeks ago. Everyone and their mother got out their detective hats and magnifying glasses to look for further clues about the next rate hike. The quote that financial market participants really ran with was that it might be appropriate to raise rates “fairly soon.” The stipulation was there that inflation will have to continue rising, and the labor market must continue to post robust numbers. On the other hand, the minutes also showed us that there was a lot of debate about how the new administration’s fiscal policies would impact the economy.
Click here to get today’s latest mortgage rates (Feb. 23, 2017).Some Fed officials thought that they would have pr-growth results which would put more pressure on the Fed to raise the federal funds rate more quickly. That’s definitely what a lot of investors have been counting on since Trump was elected, and it’s played a big part in the optimism we’ve seen in the markets these past few months. However, other Fed officials actually stated that they think that investors may have jumped the gun a bit, as they see the potential for several of Trump’s policies to either never be implemented or to take much longer than previously thought.
It’s an interesting admission, and one that could mean a rate hike is actually further out than we’ve been led to believe. In the end, the Fed minutes were a mixed bag of pessimism and optimism. As for the upcoming March meeting, the Fed Fund futures (22.1% chance of a rate hike) are telling us that it’s still a long shot for any action to be taken then. That number is up about 5% from where it was pre-fed minutes, but it’s nothing that you want to hang your hat on. For now we just have to sit back and wait for the economic data to roll and tell us where things are going.
What does this mean for me?
The path ahead is uncertain. There is bound to be market volatility, tipping the scales one way or another. The good news is that mortgage rates are still at very low levels historically, and they don’t seem poised to surge significantly higher anytime soon. That means that right now is a good time for anyone looking to refinance their current mortgage or purchase a home.
Today’s economic data:
Jobless Claims
Applications for U.S. unemployment benefits came in at 244,00 for the week of 2/18. That’s right in line with economists’ expectations, and 6,000 higher than the previous reading. The four-week moving average is now at 241,000. The February jobs report isn’t that far off and it’s shaping up to be a decent report.
Fedspeak
- Atlanta Fed President Dennis Lockhart spoke this morning, with the focus of his remarks being the need for looser regulations in the banking industry.
- Dallas Fed President Robert Kaplan will speak at 1:00pm.
EIA Petroleum Status
For the week of 2/17:
- Crude Oil: 0.6 M barrels
- Gasoline: -2.6 M barrels
- Distillates: -4.9 M barrels
Notable events this week:
Monday:
- Markets Closed for President’s Day.
Tuesday:
- Fedspeak
- PMI Manufacturing Index
Wednesday:
- Existing Home Sales
- Fedspeak
- FOMC Minutes
Thursday:
- Jobless Claims
- Fedspeak
- EIA Petroleum Status
Friday:
- New Home Sales
- Consumer Sentiment
from Total Mortgage Underwritings Blog http://ift.tt/2mph6XK
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