It’s been another up and down week for bond yields and mortgage rates. Right now, we’re looking at rates finishing out the week at levels close to where they started.
Inflation concerns are still creating ripples in the markets, and could very well continue to do so next week. It’s a volatile market right now for sure, with the long-term trend continuing to be for current mortgage rates to rise. Read on for more details.
Where are mortgage rates going?
Rates down on the day as we head into the weekend
Financial market participants have an appetite for bonds today, pushing down Treasury yields. The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) is down almost five basis points to 2.86%. We saw that yield hit a 4-year high on Thursday at 2.93%.
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Mortgage rates typically move in the same direction as the 10-year yield, and as we saw in the Freddie Mac Primary Mortgage Market Survey this week, the average rate on a 30-year fixed rate mortgage jumped up six basis points to 4.38%–its highest position since April 2014.
It was Wednesday’s Consumer Price Index report that was the main instigator this week, coming in with a monthly rise of 0.5%, two tenths higher than expected.
With inflation concerns on top of every investor’s mind, this reading only further bolstered opinions that the Fed will have to accelerate their rate hike path for 2018, meaning four or more increases.
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The next opportunity for the Fed to increase the federal funds rate happens next month (3/21). Looking at the CME Group’s Fed Funds Futures, we can see that the market thinks there’s about an 83.1% chance that we get a quarter point increase up to 1.50%-1.75%.
With this type of scenario looming over the markets, it seems as though mortgage rates are destined to continue their climb. Already in 2018 we’ve seen the average on the 30-year fixed rate mortgage creep up 39 basis points. That’s no small increase.
Still, though, it is important to note that many analysts are calling for rates to hit 5% by the time 2019 rolls around. So when you stop and consider that that’s sixty-one basis points above the current average, it paints today’s rates in a different light.
Rate/Float Recommendation
Lock in a rate soon
The trend is clear: mortgage rates are moving higher. For many borrowers, this means that the best path forward is to lock in a rate as soon as possible.
Learn what you can do to get the best interest rate possible.
You really don’t want to be in the position where you could have locked in a rate and then they go and spike another thirty basis points in a month. Everyone’s situation has its own set of unique variables but you really have to weigh the risks of holding off on a rate lock.
If you’re not sure what’s best for you, you can always give our mortgage specialists a call or contact us online.
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Today’s economic data:
Housing Starts
Housing starts for January came in at an annualized rate of 1.326 million. Housing permits came in at an annualized rate of 1.396 million.
Import and Export Prices
Import prices rose 1.0% month over month, putting them at 3.6% year over year. Export prices rose 0.8% month over month, bringing them to 3.4% year over year.
Consumer Sentiment
Consumer sentiment came in at 99.9 for February. Aside from last October, this is the highest reading in 14 years.
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Notable events this week:
Monday:
- Nothing
Tuesday:
- NFIB Small Business Optimism Index
- Fedspeak
Wednesday:
- Consumer Price Index
- Retail Sales
- Atlanta Fed Business Inflation Expectations
- Business Inventories
- EIA Petroleum Status Report
Thursday:
- Jobless Claims
- Philadelphia Fed Business Outlook Survey
- PPI-FD
- Empire State Mfg Survey
- Industrial Production
- Housing Market Index
Friday:
- Housing Starts
- Import and Export Prices
- Consumer Sentiment
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from Total Mortgage Blog http://ift.tt/2HkD89b
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