U.S Mortgages Rates: Up for a 7th Week in a Row
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The markets had another week of volatility, which needed a Friday rally in the Dow Jones, S&P500, and NASDAQ to end the week in positive territory.
While we saw the equity market fear of yields subside in the previous week rally, this was not the case last week and the release of the FED’s monetary policy meeting minutes from the January FOMC meeting certainly caused a stir.
From the minutes it was clear that members of the FOMC had upwardly revised their economic projections when considering economic indicators going into the end of January meeting, whilst also factoring in the Tax Reform Bill that hadn’t been considered in the December projections.
Coupling the minutes with January’s wage growth and inflation figures, the general sense is that the FED may need to lift rates on at least four occasions this year, the first expected to be in next month’s policy meeting.
The Dow reversed a more than 300 point gain to end the day down 166 points following the release of the minutes, with the 10-year Treasury yield jumping to a fresh 4-week high 2.95% on Wednesday to hit mortgage rates, before yields eased back to 2.87% by Friday’s close.
It’s all about interest rates and inflation and mortgage rates are at the mercy of both.
Freddie Mac rates for new mortgages last week were quoted to be:
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30-year fixed rate loan rose to from 4.38% to 4.40% last week and up from 4.16% a year ago.
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15-year fixed rates rising from 3.84% to 3.85% and from 3.37% from a year ago.
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5-year fixed rates stand at 3.65%, up from the previous week’s 3.63% and 3.16% a year ago.
Refinancing rates are currently as follows:
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30-year fixed to refinance rates slipped from 4.32% to 4.32%,
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15-year fixed to refinance rates rose from 3.70% to 3.73%.
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10-year fixed to refinance rates were unchanged at 3.65%.
The moves in the refinancing rates may provide prospective home buyers with some hope, in that 30-year fixed to refinance rates slipped, but when considering the key drivers to 10-year treasury yields, which ultimately impact mortgage rates and borrowing costs in general, current levels with an upward bias are likely to persist through March.
For those who have delayed buying a new home, more delay could well mean more pain, with 30-year fixed rates now at the highest level since April of 2014.
The unknown, for now, is how aggressively the FED has upwardly revised its economic projections. The March 20-21st FOMC meeting, which will conclude with the release of the FOMC’s 1st quarter economic projections will be key to the direction of mortgage rates through the Spring.