It’s been a fairly eventful week with a key speaking engagement from the chair of the Federal Reserve (which didn’t disappoint). Then yesterday President Trump came out and started to talk about imposing tariffs on steel and aluminum, which sent stocks reeling and put some upward pressure on mortgage rates. Read on for more details.
Where are mortgage rates going?
Trump roils markets with trade war talk
President Trump stated on Thursday that he is getting ready to implement tariffs on imported steel and aluminum products. The stock market did not take well to the conversation, with the Dow Jones Industrial Average falling 420 points on the day.
Today, those concerns are staying front and center for market participants, with all of the major market indexes trading lower by about 1.00%. These investors are fleeing stocks for the perceived safety of precious metals and government bonds.
The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) is currently sitting at 2.83%. That’s up almost two basis points from the start of the day, but below where it started the week at 2.88%.
Mortgage rates typically move in the same direction as the 10-year yield, so rates are up a little bit on the day but flat to slightly lower on the week.
It’s true that mortgage rates did rise for the eighth consecutive week in the Freddie Mac Primary Mortgage Market Survey (PMMS), but data for that survey is collected early on in the week.
We’ve been on a mostly downward trajectory since Wednesday, so the PMMS doesn’t reflect current market conditions. There’s no doubt, though, that mortgage rates are still poised for move higher in the coming weeks and months.
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Fed Chair Jerome Powell did paint a very optimistic picture of the U.S. economy, leading many financial market participants to believe that three rate hikes are definitely in the cards for 2018–with a strong maybe for four rate hikes.
It’s not a direct relationship but the Fed increasing the nation’s benchmark interest rate–the federal funds rate–will result in mortgage rates moving higher.
Rate/Float Recommendation
Lock in a rate now before rates jump
The average rate on a 30-year fixed rate, according to the Freddie Mac PMMS, has risen forty-eight basis points since the start of the year. Market analysts are calling for another fifty basis point increase before the year is over.
Learn what you can do to get the best interest rate possible.
It doesn’t take a seasoned home buyer to understand that you don’t want your rate to be higher by a half a percentage point. The bottom line here is that the longer you wait to lock in your rate on a purchase or refinance, the greater the likelihood you’re going to get a higher rate.
Today’s economic data:
Consumer Sentiment
The final reading for consumer sentiment in February came in at 99.7.
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Notable events this week:
Monday:
- Fedspeak
- Chicago Fed National Activity Index
- New Home Sales
- Dallas Fed Mfg Survey
Tuesday:
- Durable Goods Orders
- International Trade in Goods
- Jerome Powell Testimony
- FHFA House Price Index
- Consumer Confidence
- Richmond Fed Manufacturing Index
Wednesday:
- GDP
- Chicago PMI
- Pending Home Sales Index
- EIA Petroleum Status Report
Thursday:
- Jobless Claims
- Personal Income and Outlays
- PMI Manufacturing Index
- ISM Mfg Index
- Construction Spending
- Fedspeak
- Jerome Powell Testimony
Friday:
- Consumer Sentiment
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from Total Mortgage Blog http://ift.tt/2GVopRm
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