Mortgage Rates Lower to Start Busy Week of Data

Last week there was not much on the docket that was likely to move mortgage rates. This week is a different story. There is a lot of domestic data that can push us out of our new mortgage rate channel with a good deal of volatility along with a key testimony from the new chair of the Federal Reserve.  Early morning reports are showing that current mortgage rates are improving with the 10-year Treasury below 2.90%. With so much happening over the next few days, it is hard to say where mortgage rates will be on Friday.

Where Are Mortgage Rates Going?                     

>>> Rates are moving lower thus far today.

This week brings in more economic reporting and guidance than we had last week, with Thursday being the biggest day for news. We have multiple reports out every day with New Home Sales out this morning, Durable Goods orders on Tuesday, GDP on Wednesday, Personal Income and Outlays on Thursday, and Consumer Sentiment on Friday.

We have seen the hype over rising inflation subside a bit over the past few trading sessions, with investors seemingly finding comfortable footing in this still new year. At this time, financial market participants are just expecting the data to come in strong enough to push forward the status quo of gradual rate hikes from the Fed.

We are still looking at the March FOMC meeting as a sure thing for a quarter point increase to the federal funds rate. That would bring the target range for the nation’s benchmark interest rate up to 1.50%-1.75%. Turning to the Fed, we are going to get a glimpse into the mind of the current Fed Chair, Jerome Powell, on Tuesday and Thursday when he goes before the House and the Senate, respectively.

The big focus is on Tuesday’s testimony, as he is likely to say everything the markets are looking for during that engagement. Typically, these types of encounters are very even-keeled and diplomatic.

It is not the time for a new Fed Chair to mark a stake in the ground and roil the markets. For Powell, this means reiterating the tone in the FOMC minutes last week with talk about a cautious approach to the gradual rate hike path the lies ahead.

Despite the overwhelming likelihood of a tempered discussion, financial market participants near and far will be tuned in to see what he has to say, which means there’s the possibility for a strong market reaction after the matter. At this point, it appears most likely that a confident, measured, Powell will instill confidence in the markets, leading to a slight push higher for stocks and mortgage rates.

Again, looking at the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) we can see that it is down a few basis points to 2.85%.

This is now the third straight session where the 10-year yield is trending lower. Mortgage rates tend to move in the same direction as the 10-year yield, so rates are improving to start the week.

Rate/Float Recommendation           

>>> Lock in a rate soon.

With mortgage rates moving a little lower to begin the week, right now is a great time to lock in a rate on a purchase or refinance. If you end up waiting a few weeks or months to lock, you run the risk of getting a significantly higher rate.