Mortgage rates saw a decent week overall, despite a few days of downturns. Most economic data came in near expectations yielding few surprises and the FOMC Announcement was relatively unsurprising as well.
- 30-year fixed-rate mortgage (FRM) averaged 3.84 percent with an average 0.7 point for the week ending May 21, 2015, down from last week when it averaged 3.85 percent. A year ago at this time, the 30-year FRM averaged 4.14 percent.
- 15-year FRM this week averaged 3.05 percent with an average 0.6 point, down from last week when it averaged 3.07 percent. A year ago at this time, the 15-year FRM averaged 3.25 percent.
The week started off with rates rising slightly alongside a selloff in European bond markets. Bond markets recovered as the week progressed with no significant surprises in economic data and a FOMC announcement that was largely interpreted to mean a rate hike in June will not occur. The FOMC indicated that any rate hikes will be economic data dependent, but the timing is still a bit down the road, which led most analysts to believe that a June rate hike is not in the cards.
The most noteworthy thing in the FOMC minutes may have been that they noted they may not telegraph in advance when the first rate hike will occur, but rather make the determination based on economic data. This may make data releases impact on the markets more significant going forward.
Fed Chair Janet Yellen said Friday that if the economy improves as expected, she believes it will be “appropriate” for the Fed to raise the Federal Funds Rate later this year, which in turn, would affect mortgage interest rates.
Last week ended on a short trading day as the markets close early going into Memorial Day weekend.
Economic indicators that missed expectations last week included; Jobless Claims at 274k versus a 270k estimate, Existing Home Sales 5.04M versus a 5.23M estimate, Market U.S. Manufacturing PMI 53.8 versus a 54.5 estimate. Indicators that met or beat expectations included; Housing Starts 1135K versus a 1015K estimate, Continuing Claims 2211K versus a 2231K estimate, CPI Ex Food & energy (MOM) +0.3% versus a +0.2% estimate.
Rates remain near historic lows making this an excellent time to purchase a new home. Low rates and attractive home prices make for greater home affordability. Waiting for rates to decline, or waiting to commit to a purchase later this year, could wind up costing more if rates continue to inch higher.
By: Michael Borodinsky
Vice President/Regional Builder Branch Manager | Caliber Home Loans
Call Michael: 732-382-2654
Email Michael: Michael.Borodinsky@caliberhomeloans.com
Follow Michael on Twitter: @mikeborodinksy