The minutes from the Federal Reserve’s FOMC meeting a few weeks ago were released yesterday and it revealed that there is definitely some economic uncertainty in the air. With no clear path ahead, investors moved more into government bonds, pushing mortgage rates lower. That trend is continuing today, keeping rates near 2017 lows.
Where are mortgage rates going?
Rates move lower after Fed minutes
The big market-moving news yesterday was the minutes from the Federal Reserve’s FOMC meeting a few weeks ago. Somewhat surprisingly, the notes showed that a divide is forming at the Fed between the doves and the hawks.
Click here to get today’s latest mortgage rates (Aug. 17, 2017).
On the one hand, the doves are concerned that inflation is showing no signs of picking up to the Fed’s target of 2%. Until there is clear evidence of that happening, they do not feel comfortable raising the federal funds rate any further.
On the other hand, the hawks are arguing that the labor market is strong and that failing to increase rates right now will cause them to overshoot their employment target. The situation is a tricky one and it’s definitely creating some tension at the Eccles Building.
It’s not that investors were caught off-guard, exactly, but this is one of the first times that we have seen a clear split in 2017 between those who would like to continue on the current path and those who would like to wait. Also of note is the omission of any target date for the Fed to begin unwinding its balance sheet.
The result in the markets was a slight shift out of stocks and into bonds, pushing Treasury yields lower. The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) fell about four basis points in afternoon trading yesterday. Right now, at 2.12%, it’s down about seven basis points from where it was this time yesterday.
Mortgage rates typically move in the same direction as the 10-year yield so rates have improved over the past 24 hours. That means that they are continuing to run close to 2017 lows.
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Mortgage rates fall again in Freddie Mac PMMS
For the second week in a row mortgage rates fell in the Freddie Mac Primary Mortgage Market Survey (PMMS). Here are the numbers:
- The average rate on a 30-year fixed rate mortgage fell one basis point to 3.89% (0.4 point)
- The average rate on a 15-year fixed rate mortgage fell two basis points to 3.16% (0.5 point)
- The average rate on a 5-year adjustable rate mortgage ticked up two basis points to 3.16% (0.4 point)
That puts the 30-year fixed just one basis point above the low for 2017 logged back in early June. Here is what chief economist at Freddie Mac, Sean Becketti, had to say about rates this week:
“Following a mild decline last week, the 10-year Treasury yield rose 1 basis point this week. The 30-year mortgage rate similarly remained relatively flat, falling just 1 basis point to 3.89 percent. Mortgage rates are continuing to hold at low levels amidst ongoing economic uncertainty.”
What does this mean for me?
Lock now while rates are low
Mortgage rates are at some of the best levels they’ve been at all year. If you can, it definitely makes sense to lock in a rate on a purchase or refinance right now while rates are this low.
To get the most accurate idea of what kind of rate we could offer, you should fill out our short form and get a personalized rate quote. Or, if you’d rather talk to someone, you can always call one of our experienced mortgage specialists.
They can walk you through the same process, clarifying any questions you may have, and let you know what your custom rate quote is.
Today’s economic data:
Jobless Claims
Applications for unemployment benefits came in at 232,000 for the week of 8/12/17. That’s 8,000 below the consensus. The 4-week moving average is now at 240,500.
Philly Fed Business Outlook
The General Business Conditions Index from the Philly Fed came in at a strong 18.9 for August. That’s slightly below the prior reading but still above the consensus for 17.0.
Industrial Production
Industrial production ticked up 0.2% for July. Disappointingly, manufacturing fell by 0.1%.
Notable events this week:
Monday:
- Nothing
Tuesday:
- Retail Sales
- Empire State Mfg Survey
- Import and Export Prices
- Business Inventories
- Housing Market Index
Wednesday:
- Housing Starts
- EIA Petroleum Status
- FOMC Minutes
Thursday:
- Jobless Claims
- Philly Fed Business Outlook
- Industrial Production
Friday:
- Consumer Sentiment
from Total Mortgage Underwritings Blog http://ift.tt/2uTOzyd
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