The average 30-year fixed rate mortgage was 6.36% yesterday, an increase of 0.05% since the day before. The 15-year fixed mortgage rate stood at 5.4%, up by 0.04%. The 30-year FHA mortgage averaged 5.64% yesterday, having risen by 0.04. Meanwhile, the 30-year jumbo mortgage rate was 6.7%, reflecting an increase of 0.05%.
The bigger picture
Mortgage rates nudged modestly upward yesterday. But it had little to do with government shutdowns, tariff rows, the independence of the Federal Reserve, economic data, or any of the other domestic craziness that preoccupies our media. No, it was likely a result of the French prime minister resigning.
"U.S. government debt was selling off Monday morning on overseas developments that included the resignation of French Prime Minister Sebastien Lecornu after less than a month on the job," reported MarketWatch. "The surprise resignation threw France into political chaos, sending yields on European government bonds higher as underlying maturities sold off. That triggered a sympathy trade in the U.S., which caused Treasurys to cheapen during the overnight session, according to BMO Capital Markets strategists Ian Lyngen and Vail Hartman."
What has that to do with U.S. mortgage rates? Well, those typically shadow the yield on 10-year Treasury notes, and bond yields inevitably rise when bond prices fall. With luck, political turmoil in Paris will have just a one-day effect on those rates and yields.
Shutdown news
There was a glimmer of hope in the shutdown saga yesterday. "President Trump signaled a willingness to strike a deal on extending healthcare subsidies demanded by Democrats, as the government shutdown entered its second week," said The Wall Street Journal yesterday. "'We have a negotiation going on right now with the Democrats that could lead to very good things,' Trump told reporters in the Oval Office on Monday."
Before that, the prospects of a swift resolution of the conflict between Republican and Democratic lawmakers had looked slim. Earlier that afternoon, MarketWatch had run the headline, "‘Buckle up for a long shutdown’: Why the government might be closed for weeks."
Of course, we're still a way off the government reopening, and negotiations between the two sides could be difficult. But yesterday was the first time we've glimpsed light at the end of the tunnel.
An early reopening could be good or bad for mortgage rates. Most economists expected them to drift gently lower for the duration. But what happens to them once civil servants are fully back to work will largely depend on economic data, most importantly, last Friday's delayed jobs report and next Wednesday's consumer price index (CPI).
Tomorrow's Fed minutes
The Federal Reserve is due to publish some key minutes tomorrow afternoon. They're the record of the last meeting of the Fed's monetary policy body, the Federal Open Market Committee (FOMC).
FOMC minutes always have the potential to move markets and mortgage rates. Whether these do will depend on whether they tell investors anything new about that last meeting.
Tomorrow's may not, because we've already had a lot of insights from the Fed chair's and other FOMC members' public speeches. The last meeting also saw the release of a summary of economic projections, which reveals a lot about members' views. We'll just have to wait to see whether there's anything new this afternoon.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.36% | 6.39% | +0.05% | +0.06% |
| 15-Year Fixed | 5.4% | 5.45% | +0.04% | +0.17% |
| 30-Year Fixed FHA | 5.64% | 6.85% | +0.04% | +0.02% |
| 30-Year Fixed VA | 5.78% | 5.93% | +0.08% | +0.09% |
| 30-Year Fixed USDA | 5.77% | 5.92% | +0.18% | +0.13% |
| 30-Year Fixed Jumbo | 6.7% | 6.72% | +0.05% | +0.13% |
| 5/6 Year ARM | 6.41% | 6.44% | +0.09% | +0.11% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.43% | 6.46% | +0.04% | +0.05% |
| 15-Year Fixed | 5.38% | 5.43% | +0.06% | +0.17% |
| 30-Year Fixed FHA | 5.58% | 6.79% | +0.04% | +0% |
| 30-Year Fixed VA | 5.8% | 5.95% | +0.09% | +0.09% |
| 5/6 Year ARM | 6.41% | 6.44% | +0.03% | +0.13% |
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.
Here's Comerica Bank's economics team's view of what to expect this week:
"Financial markets will dissect the minutes of the FOMC’s September meeting to search for new clues about policymakers’ views of the economy and future monetary policy and try to clarify the wide split of views among Committee members. Consumer sentiment is expected to have eased in early October, while short- and long-term inflation expectations are anticipated to have held steady at elevated levels. Consumer credit growth likely moderated in August following robust expansion in the prior month. If the government shutdown doesn’t prevent their release, foreign trade data will likely show the deficit narrowed in August, and the federal fiscal balance swung to a seasonal surplus in September."
Mortgage rates today
There is just one economic report on today's MarketWatch economic calendar. That's August's consumer credit report from the Fed, due at 3 p.m. Eastern.
These reports rarely affect mortgage rates, but markets are expecting consumer credit to moderate, falling to $14 billion in August from $16 billion in July. The higher the actual number, the better for mortgage rates.
