Mortgage rates are continuing to move higher as the week progresses; however, the upward pressure is somewhat more mild today. The big news is the European Central Bank’s policy changes as well as the House of Representatives vote on the budget resolution. Read on for more details.
Where are mortgage rates going?
Rates move up
Mortgage rates have been on the rise for about a week now based on several political and economic factors. Here are the numbers from the Freddie Mac Primary Mortgage Market Survey (PMMS) this week:
- The average rate on the 30-year fixed rate mortgage moved up six basis points to 3.94% (0.5 point)
- The average rate on the 15-year fixed rate mortgage went up six basis points to 3.25% (0.5 point)
- The average rate on the 5-year adjustable rate mortgage ticked up four basis points to 3.21% (0.4 point)
Tax Reform
An increase in market optimism about the chances for upcoming tax reform definitely had a hand in pushing rates higher. Last Thursday a budget resolution made its way through the Senate, which was a major step forward for tax reform.
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Today, the House of Representatives approved that same budget, albeit with a lot less ease than was first expected. The vote wound up being 216-212, as 20 Republicans wound up voting with the opposing Democrats.
The markets have already reacted favorably to the news, with bonds selling off as they did when the Senate approved the budget.
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The yield on the 10-year Treasury note (which is the best market indicator of where mortgage rates are going) is up to 2.44%. Mortgage rates typically move in the same direction as the 10-year yield, so they’re dealing with some slight upward pressure today.
European Central Bank
The ECB met today to discuss monetary policy and, as expected, they reduced their bond-buying program by half down to 30 billion euros a month. Interestingly, though, the decision was far from unanimous with several officials preferring to keep the current program.
Rate/Float Recommendation
Lock in your rate today
Mortgage rates have been trending higher for the past week and a half and are now at 3-month highs in the Freddie Mac PMMS. This is something that we’d been expecting for a while now.
Given that the long-term trend is still for rates to rise, we recommend that anyone who is looking to refinance or purchase in the near-term lock in their rate sooner rather than later. If you’ve got some time, you could think about floating and trying to get in on a downturn, but that’s a risky game to play.
Click here to head to our Mortgage Builder and figure out how much you could save.
Today’s economic data:
International Trade in Goods
The nation’s trade deficit widened to $64.1 billion in September.
Jobless Claims
Applications for U.S. unemployment benefits for the week of 10/26/17 came in at 233,000. That’s 2,000 below the consensus.
European Central Bank Meeting
The ECB met today and cut their asset purchasing program in half.
Pending Home Sales Index
Pending home sales were unchanged from the previous month in September. That’s below the expectation for a 0.4% increase.
Fedspeak
Minneapolis Fed President Neel Kashkari at 10:30am.
Notable events this week:
Monday:
- Nothing
Tuesday:
- PMI Composite Flash
Wednesday:
- Durable Goods Orders
- New Home Sales
- EIA Petroleum Status Report
Thursday:
- International Trade in Goods
- Jobless Claims
- European Central Bank Meeting
- Pending Home Sales Index
- Fedspeak
Friday:
- GDP
- Consumer Sentiment
from Total Mortgage Blog http://ift.tt/2iBxzv6
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