Mortgage rates continued a relentless move higher in the beginning of the week, ahead of the March FOMC meeting. Currently, interest rates are very close to their highest levels in three years. Stocks were mixed, while pricing on treasury bonds and mortgage-backed securities were down during Monday’s trading session, and as a result mortgage rates spiked. The average lender is now offering standard 30-year fixed mortgages at a rate of 4.375% in the best scenarios, but several loan providers are now quoting higher rates for this type of fixed conventional mortgage.
In recent trading, the yield on the benchmark 10-year treasury note closed at the highest level since September 2014. The 10-year treasury yield increased 4 basis points to finish the trading session at 2.62%. Pricing on mortgage-backed securities (MBS), which tends to move in the same direction as 10-year treasury notes, decreased as well. When pricing on MBS declines, mortgage rates tend to move higher. This is the reason, why current mortgage rates are higher compared to rates from last week. The longer-term 30-year treasury yield jumped 4 basis points and finished the trading day at 3.20%, according to the latest market information.
On Tuesday morning MBS is in the green, despite some better-than-expected domestic economic data (more on that later). If MBS remains in positive territory, mortgage rates could take a breather.
All eyes are on the Fed this week, as the March FOMC meeting will get underway later today. The U.S. central bank concludes its two-day meeting on Wednesday and will release a written policy statement. It’s widely expected that the central bank will hike rates this week, it would be shocking if they didn’t. The odds for a March rate hike is now at 95.2%, up 2.2% since Monday, according to the CME FedWatch tool. As there’s a strong possibility for a monetary tightening this week, the market’s focus is now shifting to the pace of rate hikes going forward. Market watchers will parse the Fed’s language in the upcoming policy statement for signals on the pace of future rate increases.
One piece of economic data got released earlier today, in the form of February’s producer price index (PPI). The producer price index, which measures the prices of services and goods before they reach consumers, rose more than expected in February. According to the Labor Department’s report, producer prices increased a seasonally adjusted 0.3% last month. Economists had projected an increase of 0.1% for February’s producer price index. Core producer prices, which strip out food and energy categories, advanced 0.3% last month, the latest data revealed.
Tomorrow we will get more economic data, including fresh readings on retail sales, consumer prices, regional manufacturing activity as well as homebuilder sentiment. Later on in the week some more reports are slated for release, such as weekly jobless claims, housing starts, Philadelphia Fed business outlook survey, industrial production data and consumer sentiment index. However, in terms of big ticket, market moving events, the highlight of the week is going to be the March FOMC meeting.
Current mortgage rates remain stable at top U.S. lenders, according to the the most up-to-date mortgage information. California-headquartered major lender, Wells Fargo (NYSE:WFC), offers the standard 30-year fixed home purchase loan at a rate of 4.375%. The 15-year fixed home mortgage is quoted at a rate of 3.750%. As far as home refinancing options are concerned, the lender’s long-term 30-year FRM is up for grabs at a rate of 4.500%. The popular 15-year fixed refinance loan comes with 3.750% interest cost.
Over at Bank of America (NYSE:BAC), the 30-year fixed conventional home loan is available today at a rate of 4.625. The shorter-term, 15-year fixed counterpart can be secured at a rate of 4.000%.
Under BofA’s refinace loan program, the 30-year fixed mortgage has an asking rate of 4.625%. Borrowers, who believe the 15-year fixed refinance loan fits the bill better can expect to pay 4.125% interest cost.
The above mentioned interest rates are subject to change and are not guaranteed.