|Mortgage Rates Slightly Higher: Fed Coming Up Next Week
April 28, 2017
Mortgage rates moved higher this week as financial markets reacted the French election and optimism ahead of Trump’s tax plan announcement. Once the announcement turned out to be less threatening than markets anticipated, rates eased back toward lower levels but never recovered all the way to last Friday’s levels.
Most lenders are quoting top tier conventional 30yr fixed rates in a range of 4.0-4.125%. This leaves us right on the upper edge of the lowest range of 2017. Remaining here would be nice, but whether or not it’s possible may depend on next week’s Fed Announcement (Wednesday afternoon).
While the Fed isn’t expected to hike rates this time around, investors will nonetheless attempt to pick up on clues about future policy potential.
–Matthew Graham, Chief of Operations, Mortgage News Daily
30 Year Fixed Rate Mortgage
Week in Review
Rates shown below are based on the 30 Year Fixed Rate Mortgage
Friday, April 21, 2017 : 4.05% (+0.01%)
Mortgage rates were sideways to slightly higher this week as global financial markets braced for volatility surrounding this weekend’s French election. While it may seem like a world away from the domestic mortgage market, events that potentially impact the stability of the European Union have a strong track record of filtering through to movement in domestic bond markets. And bond markets are the primary driver of day-to-day movement in mortgage rates. In addition to preparations for the weekend’s events, traders also reacted to today’s headlines concerning tax reform. Just before 2pm, the Associated Press reported that Trump would announce his tax plan next week and that it would be bigger than “any tax cut ever.”
More detail: “Mortgage Rates End Week Roughly Unchanged”
Monday, April 24, 2017 : 4.08% (+0.03%)
Mortgage rates moved moderately higher today, and most of the blame goes to the presidential election in France. If you’re wondering what European politics have to do with mortgage rates in the US, you’re not alone. While it certainly isn’t the first thing that comes to mind when thinking about what’s motivating rates, its impact was unmistakable today.
To understand the connection, first consider that the EU economy is slightly bigger than that of the US. Then consider France is the third biggest economy in the EU. Germany is the biggest and the UK is the second biggest. On that note, don’t forget that the UK is currently in the process of exiting the European Union. Now to bring it all home, simply consider that one of the candidates in the French election (Marine Le Pen) wants France to exit the EU as well.
More detail: “Mortgage Rates Slightly Higher After French Election”
Tuesday, April 25, 2017 : 4.11% (+0.03%)
Mortgage rates moved moderately higher again higher today, as global financial markets continued reacting to recent geopolitical flashpoints (like the French election, discussed yesterday). Markets are also moving in anticipation of future flashpoints (like tomorrow’s tax reform announcement). In general, investors have piled back into riskier assets like stocks because the French election reduces long-term risks to the European Union. Investors previously were more willing to buy bonds–a safe haven asset frequently used to insulate investors from increased risk. The prospects for tax reform have a similar effect in that they encourage investors to favor riskier assets at the expense of bonds. When demand for bonds decreases relative to supply, rates move higher.
More detail: “Mortgage Rates Highest in 2 Weeks”
Wednesday, April 26, 2017 : 4.11% (+0.00%)
Mortgage rates were relatively unchanged today, but only after averaging the disparate changes from various lenders. That means some lenders are in much better shape versus yesterday while others are noticeably worse. This sort of disparate movement isn’t typical of mortgage rates across lenders, but it can happen when underlying bond markets experience volatility on back-to-back afternoons. That was indeed the case over the past 48 hours. Bond markets weakened (which pushes rates higher) yesterday afternoon, but only a handful of lenders issued reprices (new, higher rates, in response to intraday market movement). Today’s volatility was in our favor resulting in several lenders issuing POSITIVE reprices.
More detail: “Mortgage Rates Hold Ground After Tax Plan Release”
Thursday, April 27, 2017 : 4.09% (-0.02%)
Mortgage rates moved lower today, following a policy announcement from the European Central Bank (ECB). Some investors were concerned the ECB might begin sprinkling in clues about rate hikes or an early end to bond buying programs, but there was no such drama in the announcement or the press conference that followed.
More detail: “Mortgage Rates Fighting to Stay Near 2017 Lows”
Friday, April 28, 2017 : 4.09% (+0.00%)
Mortgage rates were unchanged today, holding onto modest improvements seen yesterday. In many ways, the past 2 days have confirmed that rates are in limbo near the lower end of the post-election range. To be sure, they were definitively lower in mid-April, but they’re much closer to recent lows than highs. More importantly, current levels have acted as a line in the sand that divides the year’s lowest rates from everything else. In other words, we’d really like to remain in this zone.
More detail: “Mortgage Rates Unchanged Heading Into Fed Week”