Mortgage Rates Up After Wild Ride

After experiencing a wild ride, mortgage rates are up over this time yesterday, but not as high as when the day ended.  As I stated yesterday, there was some fears that could materialize when the minutes from the FOMC meeting a few weeks ago would be released, and I hate to be right in what transpired. Today, we are seeing a retraction as what is usually the case, an overreaction to what happened.

Where Are Mortgage Rates Going?                     

>>> Rates are coming back down after rising sharply yesterday afternoon.

Financial market participants across the nation were tuned in yesterday when the FOMC Minutes were released to see if there were any hints about the rate hike path in 2018, and to some extent, they were not disappointed. Optimism about the U.S. economy rang loud and clear through the minutes, with FOMC members revising their economic projections higher from the previous meeting in December.

The FOMC’s next meeting is about a month away in March, and the consensus from investors has been that there will be a quarter point increase to federal funds rate at that time. Now, after the release of yesterday’s minutes, that decision is further bolstered.

We still have a decent amount of economic data that will come out between now and then, including the monthly jobs report for February and several inflation readings, but it is hard to imagine a scenario where the numbers come in low enough to sabotage a March rate hike.

As one would expect, the market reacted swiftly to the FOMC minutes, with the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) moving up to a multi-year high of 2.95% in afternoon trading.

Today, though, we have seen the markets settle down a little, with the 10-year yield moving back down to around 2.90%. That’s slightly above where it started the week. Mortgage rates typically move in the same direction as the 10-year yield.

Freddie Mac’s Economic and Housing Research Group stated in their report on rates “…fixed mortgage rates increased for the seventh consecutive week… the highest since April of 2014. Mortgage rates have followed U.S. Treasury’s higher in anticipation of higher rates of inflation and further monetary tightening by the Federal Reserve. Following the close of our survey, the release of the FOMC minutes for February 21, 2018 sent the 10-year Treasury above 2.9 percent. If those increases stick, we will likely see mortgage rates continue to trend higher.”

Rate/Float Recommendation           

>>> Lock now to avoid risk of rising rates

Mortgage rates have now moved higher for seven straight weeks. Since the start of the year the average rate on a 30-year fixed rate mortgage has increased by forty-five basis points.