The average 30-year fixed rate mortgage was 6.25% yesterday, an increase of 0.05% since the day before. The 15-year fixed mortgage rate stood at 5.38%, up by 0.08%. The 30-year FHA mortgage averaged 5.57% yesterday, having risen by 0.09. Meanwhile, the 30-year jumbo mortgage rate was 6.79%, reflecting an increase of 0.05%.
The bigger picture
Yesterday, we wrote, "Of course, you can never rule out the unexpected causing upsets in markets." And, sure enough, we woke to rising bond yields and therefore rising mortgage rates.
Mortgage rates for 30-year fixed-rate loans rose by 6 basis points yesterday: to 6.25% from 6.19% on Friday, according to ICanBuy.
So, what happened? In its morning e-newsletter, the Securities Industry and Financial Markets Association (SIFMA) said, "US Treasury yields climbed at the start of the post-Thanksgiving week as a sharp sell-off in Japanese government bonds rippled through global markets. Japan's two-year yield rose above 1% for the first time in 17 years after BOJ [Bank of Japan, the equivalent of our Federal Reserve] Governor Kazuo Ueda signaled the likelihood of a rate hike ... "
How events in Tokyo can affect Wall Street
The Wall Street Journal explained why these events in Tokyo so quickly affected American bond markets:
"Some on Wall Street worry that rising bond yields in Japan will draw cash away from U.S. investments and spark a climb in Treasury yields, which play a key role in determining borrowing costs for consumers and businesses.
"The world’s third-largest economy is the U.S. government’s largest foreign creditor, according to Treasury Department data, holding Treasurys valued at about $1.2 trillion as of September," continued The Journal. "Private Japanese investors poured hundreds of billions of dollars into U.S. and other foreign bonds in recent years, seeking better returns than they could find at home."
In other words, there are fears that Japan's possible rate hike will reduce foreign demand for American debt. And, given a constant or rising supply of debt-based securities, that will likely push up interest rates for consumers, businesses and the U.S. government. That's because bond yields (interest rates) invariably move inversely to bond prices.
The good news is that investors so far don't seem to believe that the BOJ's possible hike will stop the Fed from cutting general interest rates on Dec. 10, according to the CME FedWatch tool.
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Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.25% | 6.28% | +0.05% | -0.03% |
| 15-Year Fixed | 5.38% | 5.43% | +0.08% | -0.03% |
| 30-Year Fixed FHA | 5.57% | 6.78% | +0.09% | -0.02% |
| 30-Year Fixed VA | 5.65% | 5.8% | +0.04% | -0.06% |
| 30-Year Fixed USDA | 5.64% | 5.78% | +0.13% | +0.01% |
| 30-Year Fixed Jumbo | 6.79% | 6.81% | +0.05% | +0.04% |
| 5/6 Year ARM | 6.06% | 6.09% | +0.05% | -0.3% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.35% | 6.38% | +0.11% | +0% |
| 15-Year Fixed | 5.37% | 5.41% | +0.08% | +0% |
| 30-Year Fixed FHA | 5.54% | 6.75% | +0.1% | +-0% |
| 30-Year Fixed VA | 5.69% | 5.82% | +0.03% | -0.08% |
| 5/6 Year ARM | 6.04% | 6.07% | +0.04% | -0.4% |
What's coming up?
Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates. News items concerning employment, inflation, tariffs and deficit funding are especially influential at the moment.
With the government reopening, we can anticipate the publication of official reports to slowly return to normal. Had the shutdown been brief, we could have expected a flood of official economic reports on reopening. But the length of the hiatus means that it is no longer the case. Data won't have been collected — let alone compiled and prepared for publication — during the shutdown. So, delayed or even canceled reports are inevitable.
This week
In its preview of this week, Comerica Bank's economics team says:
"The ISM PMI [purchasing managers' index] surveys are expected to show the manufacturing sector in continued contraction, while the services sector expands at a slower pace. Industrial production probably held steady while capacity utilization eased, in line with softer conditions in manufacturing. Personal incomes likely rose modestly in the delayed September release, while spending probably took a breather after rising robustly in August. Headline and core Personal Consumption Expenditures (PCE) Price Indices are forecast to have risen moderately, holding near 3% in annual terms. Consumer sentiment likely brightened in early December after the end of the government shutdown, while short-and long-term inflation expectations remained elevated."
Mortgage rates today
There is only one economic report on today's MarketWatch economic calendar. But it rarely affects mortgage rates.
The report covers new auto sales in November, and there's an expectation they will be weak. "The November new-vehicle sales pace, or seasonally adjusted annual rate (SAAR), is forecast by Cox Automotive to reach 15.7 million, up slightly from October’s 15.3 million pace, but down from last year’s 16.5 million level," says Cox Automotive, which monitors and analyzes sales and owns Autotrader®, Kelley Blue Book®, Manheim®, vAuto®, Dealertrack®, NextGear Capital™, CentralDispatch® and FleetNet America®. "Through October, the monthly SAAR has averaged 16.2 million."
Why are auto buyers hitting the brakes? "Electric vehicles are expected to take a big hit,
thanks to the expiration of the $7,500 EV tax credit on September 31," says Yahoo! Finance. "Consumers rushed to dealerships to take advantage of the benefit before
it expired, resulting in a sharp increase in sales. But tariffs also played a massive role in the early-year surge."
Normally, worse-than-expected economic news tends to push mortgage rates lower, while better-than-expected figures usually send
them upward. But this report would need to contain shocking figures to move mortgage rates far.
