Mortgage rates are mostly flat today but they’re higher on the week. Yesterday’s strong Consumer Price Index reading signaled to investors that the Fed might be destined for a faster rate hike schedule than previously thought, which has put upward pressure on mortgage rates. With rates moving higher, we believe borrowers should try to lock in a rate soon. Read on for more details.
Where are mortgage rates going?
Rates move higher in the Freddie Mac PMMS
Surprise, surprise: mortgage rates are continuing to climb to new highs in 2018. The latest Freddie Mac Primary Mortgage Market Survey just got released this morning and it’s showing increases all around. Here are the numbers:
- The average rate on a 30-year fixed rate mortgage moved up six basis points to 4.38% (0.6 points)
- The average rate on a 15-year fixed rate mortgage ticked up seven basis points to 3.84% (0.5 points)
- The average rate on a 5-1-year adjustable rate mortgage rose six basis points to 3.63% (0.4 points)
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Here’s what the Freddie Mac Economic & Housing Research group had to say about mortgage rates this week:
“Wednesday’s Consumer Price Index report showed higher-than-expected inflation; headline consumer price inflation was 2.1 percent year-over-year in January two tenths of a percentage point higher than the consensus forecast. Inflation measures were broad-based, cementing expectations that the Federal Reserve will go forward with monetary tightening later this year. Following this news, the 10-year Treasury reached its highest level since January 2014, climbing above 2.90 percent. Mortgage rates have also surged. After jumping 10 basis points last week, the 30-year fixed-rate mortgage rose 6 basis points to 4.38 percent, its highest level since April 2014.”
That mortgage rates increased after the strong CPI reading was a possibility that we’d warned about over the past few days. This is now the sixth straight week that mortgage rates have moved higher in the PMMS, with the 30-year fixed rate up thirty nine basis points (one basis point = 0.01) from the start of the year.
We’re talking about four-year highs right now. It’s true that every borrower has their own set of unique circumstances that will affect what rate they get, but the average is clearly up a significant amount from the start of the year.
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Rate/Float Recommendation
Lock in a rate soon
With mortgage rates continuing to move higher, we believe that the smart decision for anyone looking to purchase a new home or refinance their current mortgage is to lock in a rate sooner rather than later.
In a span of six weeks, we’ve seen the average rate on a 30-year in the PMMS move up thirty-nine basis points. That is certainly not an insignificant amount.
Learn what you can do to get the best interest rate possible.
When you consider that many analysts are calling for the 30-year to hit 5% by the time 2019 rolls around, current mortgage rates look very appealing. It really only takes a few minutes online or a quick phone call to one of our mortgage specialists to get started.
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Today’s economic data:
Jobless Claims
Jobless claims for the week of 2/10/18 came in at 230,000. That puts the four-week moving average at 228,500. It’s another solid report that points toward strength in the labor market.
Philadelphia Fed Business Outlook Survey
The Philly Fed Business Outlook hit a 25.8 for February. That’s a very strong reading that lands outside of even the high range of the consensus. It’s also a few points higher than the prior reading of 22.2.
PPI-FD
The Producer Price Index ticked up 0.4% in January. That puts it at 2.7% year over year. PPI-FD less food and energy also rose 0.4% month over month, which was higher than expectations, putting it at 2.2% year over year. Keeping with the pattern, PPI-FD less food, energy and trade services also rose 0.4%, month over month, bringing it to 2.5% year over year.
Empire State Mfg Survey
The Empire State Mfg Survey hit 13.1 in February.
Industrial Production
Industrial production fell 0.1% for January. Manufacturing stayed flat. It’s a weak report, but that was expected, with both readings falling within the consensus range.
Housing Market Index
For the second straight reading the housing market index hit a 72. That’s exactly what analysts had expected.
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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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