We saw some surprising action in the bond market yesterday which had the effect of pushing mortgage rates lower. Today, rates are holding around those levels.
Given that rates are expected to rise over the long-term, we think that anyone looking to refinance their current mortgage or buy a home should lock in a rate soon. Read on for more details.
Where are mortgage rates going?
Rates down on the week
It’s no doubt a slow, holiday-shortened week for many in the U.S., but surprisingly, we’ve actually seen some action in the bond market this week with the 10-year yield (the best market indicator of where mortgage rates are going) performing its largest single-day drop in three months yesterday.
Starting at nearly 2.48%, the 10-year yield wound up falling to a low of 2.41%, before finishing out the day at 2.42%.
The general consensus among analysts is that last week’s bond sell-off (due to the passage of the Republican tax bill through Congress) was a bit overdone by financial market participants, and so there’s been a bit of a retraction this week as positions got reconsidered.
What does this have to do with mortgage rates? Well, mortgages largely get bought and sold on the secondary market where they’re packaged as mortgage backed securities (MBS), and as they mature similarly to government bonds, they compete for similar investors.
Therefore, when government bond yields (specifically the 10-year yield) adjust, yields on MBS adjust and subsequently, so do mortgage rates.
After all of the action yesterday, we’re not seeing much movement to the 10-year yield today, so mortgage rates are mostly flat right now.
Freddie Mac PMMS
We did get the Freddie Mac Primary Mortgage Market Survey out this morning, which showed (unsurprisingly) that mortgage rates rose this past week. Here are the numbers:
- The average rate on a 30-year fixed rate mortgage increased five basis points to 3.99% (0.5 points)
- The average rate on a 15-year fixed rate mortgage moved up six basis points to 3.44% (0.5 points)
- The average rate on a 5-year adjustable rate mortgage jumped up six basis points to 3.47% (0.5 points)
It’s always important to note that the data for the PMMS is collected early on in the week and therefore does not necessarily reflect current market conditions.
For instance, this week’s survey does not reflect yesterday’s drop in the 10-year yield. Here is what Freddie Mac’s Economic and Housing Research group had to say about rates this week:
“As we expected, mortgage rates felt the effect of last week’s surge in long-term interest rates in the final, shortened week of 2017. The 30-year fixed mortgage rate increased 5 basis points to 3.99 percent in this week’s survey. Although this week’s survey rate represents a five-month high, 30-year fixed mortgage rates are still below the levels we saw at the end of last year and early part of 2017. Mortgage rates have remained relatively low all year.”
Mortgage rates are expected to rise throughout 2018, so we believe it definitely makes sense for most borrowers to lock in a rate sooner rather than later in order to try and get the best deal. It only takes a few minutes with our online form or a quick phone call to a mortgage specialist to get started.
Today’s economic data:
International Trade in Goods
The nation’s trade deficit for November widened to $69.7 billion. However, exports did increase 3.0%.
Applications filed for U.S. unemployment benefits came in at 245,000 for the week of 12/23/17. That’s a little higher than the 240,000 that was expected, bringing the four-week moving average up to 237,750.
EIA Petroleum Status Report
Notable events this week:
- Closed for Christmas
- S&P Corelogic Case-Shiller HPI
- Richmond Fed Manufacturing Index
- Dallas Fed Mfg Survey
- Consumer Confidence
- Pending Home Sales Index
- International Trade in Goods
- Jobless Claims
- EIA Petroleum Status Report
- Chicago PMI
Filed Under: Current Mortgage Rates, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates, Rates
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