Mortgage rates have remained in a tight range for the past couple of months now, however, the scales are still tipped in favor of a push higher in the coming months.
It might not happen at the pace that analysts had projected at the beginning of the year, but with the Fed planning on raising the federal funds rate a couple more times this year, it’s reasonable to expect mortgage rates will rise. Read on for more details.
Where are mortgage rates going?
Rates avoiding a sustained rise for now
Mortgage rates have proved over the last few weeks just how difficult it can be to judge where the market will go. In the beginning of the year, we saw a sharp jump up in rates that seemed as though it would persist for the duration of the year.
Instead, we’ve seen rates hit several speed bumps that have slowed the climb. In the Freddie Mac Primary Mortgage Market Survey (PMMS), mortgage rates have now declined in three out of the last four weeks.
The average rate on a 30-year fixed rate mortgage moved down five basis points to 4.57% this week. We’re still fairly close to the highest reading of the year, which was 4.66% at the end of May.
Even though the push higher for rates has been somewhat tempered recently, the stage is still set for rates to finish out the year much higher than where they are now.
By all accounts, the Federal Reserve is still on track to raise the nation’s benchmark interest rate, the federal funds rate, at least two more times this year.
That would certainly put some upward pressure on mortgage rates, potentially bringing the average rate on the 30-year fixed rate mortgage up near 5.00%.
However, in the near-term we could remain in this narrow range that we’ve been in for the past couple of months for a while longer. The Fed isn’t expected to make any moves until September, so it’s up to other market and political events to move the needle in the interim.
Given the ongoing trade drama with China, it’s unclear when investors will feel comfortable enough to take on more risk and send money out of bonds and into stocks.
This affects mortgage rates because long-term government bonds, particularly the 10-year Treasury note, have a substantial impact on the direction of mortgage rates. Recently, the 10-year yield has moved lower, resulting in a slide for mortgage rates.
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Rate/Float Recommendation
Lock before rates rise
Mortgage rates have mad a little push lower recently, so right now is a great time to lock in a rate on a purchase or refinance. The longer you wait, the more likely it is that you’ll wind up getting a higher rate on your home loan.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Chicago Fed National Activity Index
It’s a miss for the Chicago Fed National Activity Index which came in at a -0.15 for the month of May, compared to the 0.37 that analysts had expected. That brings the three month average down to a 0.18.
New Home Sales
- 10am
Dallas Fed Mfg Survey
- 10:30am
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Notable events this week:
Monday:
- Chicago Fed National Activity Index
- New Home Sales
- Dallas Fed Mfg Survey
Tuesday:
- S&P Corelogic Case-Shiller HPI
- Consumer Confidence
- Richmond Fed Manufacturing Index
- State Street Investor Confidence Index
- Fedspeak
Wednesday:
- Durable Goods Orders
- International Trade in Goods
- Pending Home Sales Index
- EIA Petroleum Status Report
- Fedspeak
Thursday:
- GDP
- Jobless Claims
- Fedspeak
Friday:
- Personal Income and Outlays
- Chicago PMI
- Consumer Sentiment
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from Total Mortgage Blog https://ift.tt/2KjSUFF
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