The average 30-year fixed rate mortgage was 6.94% yesterday, an increase of 0.03% since the day before. The 15-year fixed mortgage rate stood at 6.01%, up by 0.05%. The 30-year FHA mortgage averaged 6.3% yesterday, having risen by 0.06. Meanwhile, the 30-year jumbo mortgage rate was 7.48%, reflecting a decrease of 0.06%.
The bigger picture
Mortgage rates closed yesterday above 7%, according to Mortgage News Daily's (MND's) figures, reaching their highest point in three months. Our numbers often differ a little from its.
"In terms of catalyst events, the bond market (and stock market, for that matter) swooned after a scheduled auction of 20-year Treasury bonds," wrote MND's Matthew Graham. "The auction results were weaker than expected, signaling lower-than-expected demand. When demand is lower for Treasuries, it puts upward pressure on bond yields (aka 'rates')."
Mortgage rates are largely determined by the yield on a type of bond (the mortgage-backed security) that tends to shadow other bonds, notably 10-year Treasury notes. Both rose yesterday.
None of this will come as a surprise to those who read this column yesterday. We warned of the likely impact of that day's auction and noted that a further one was scheduled for later today.
However, looking at the upcoming auctions page on the U.S. Treasury's website, today's auction appears to have been cancelled. Indeed, only shorter-term bills and notes remain on the May schedule.
There could be more upward pressure on mortgage rates if legislators today pass the tax-and-spending bill currently making its way through Congress. Of course, most investors love the tax cuts it offers, but some fear it will rapidly increase the deficit and debt.
Last night, The Wall Street Journal said, "House Republicans made a series of last-minute changes to their sprawling tax-and-spending bill, searching for a path that could unite the party’s warring wings headed into a nail-biter floor vote expected early Thursday."
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.94% | 6.98% | +0.03% | +0.05% |
| 15-Year Fixed | 6.01% | 6.06% | +0.05% | +0.04% |
| 30-Year Fixed FHA | 6.3% | 7.5% | +0.06% | +0.03% |
| 30-Year Fixed VA | 6.42% | 6.58% | +0.02% | +0.05% |
| 30-Year Fixed USDA | 6.26% | 6.4% | +0.04% | -0.15% |
| 30-Year Fixed Jumbo | 7.48% | 7.5% | -0.06% | +0.09% |
| 5/6 Year ARM | 6.76% | 6.81% | -0.32% | -0.06% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 7.03% | 7.06% | +0.05% | +0.06% |
| 15-Year Fixed | 5.99% | 6.04% | +0.04% | +0.03% |
| 30-Year Fixed FHA | 6.28% | 7.47% | +0.06% | +0% |
| 30-Year Fixed VA | 6.48% | 6.63% | +0.02% | +0.02% |
| 5/6 Year ARM | 6.9% | 6.94% | -0.41% | -0.04% |
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.
Here's what Comerica Bank's economic team is expecting from this week's data:
"The economic calendar will be light this week. Existing home sales likely rose in April despite lower consumer confidence. However, new home sales likely took a breather following an outsized increase in March. The flash releases of the Manufacturing and Services PMIs [purchasing managers' indices] from S&P Global probably will show the manufacturing sector contracted slightly in May, while the services sector expanded modestly."
New home sales are due Friday, but all the other economic reports are scheduled for Thursday.
Mortgage rates today and tomorrow
After an unusually slow start to the week, we're finally due some economic reports today, according to the MarketWatch economic calendar.
These comprise:
- Initial jobless claims for the week ending May 17 — Markets expect them to inch up to 230,000 from 229,000 the previous week
- Preliminary May purchasing managers' index for the services sector from S&P — Expected to fall slightly to 50.6 from April's 50.8
- Preliminary May purchasing managers' index for the manufacturing sector from S&P — Expected to fall slightly to 49.8 from 50.2
- April new home sales — Expected to rise to 4.13 million (annualized) from 4.02 million in March
Usually, higher-than-expected figures tend to push mortgage rates upward, and lower-than-expected ones tend to drag them lower. However, that isn't the case for initial jobless claims, where the opposite is true.
Tomorrow brings only one report. That's new home sales in April. They're expected to fall to 695,000 from 724,000 in March.
None of today's and tomorrow's economic reports is likely to move mortgage rates far unless it contains truly shocking data. And, judging from recent reports, even wildly unexpected figures may not have much impact.
