May 1, 2015 — The Federal Reserve closed a meeting with no change to interest rate policy this week and provided little forward guidance about when they will start lifting rates in the future. Financial markets took it to mean that the Fed has punted a move to late summer at the very earliest, and possibly not even until much later in the year.
While there isn’t quite a lockstep arrangement between mortgage rates and yields on Treasuries, there is still considerable influence from one to the other. With the mortgage-influencing 10-year Treasury yield rising by about 15 basis points during the week, mortgage rates are now in a bit of a firming trend.
HSH.com’s broad-market mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the overall average rate for 30-year fixed-rate mortgages rose by six basis points (.06%) this week to an average 3.84 percent, a six-week high but squarely in the middle of the range for 2015 so far. The FRMI’s 15-year companion had half that increase, rising by three basis points to an average rate of 3.15 percent. Popular with first-time homebuyers, rates on fully-insured FHA-backed 30-year FRMs remain considerably below their conforming counterparts but bumped up by three basis points to end at 3.62 percent for the week. Meanwhile, the overall 5/1 Hybrid ARM also added three basis points to last week’s average, edging higher to land at 3.93 percent. HSH’s FRMI includes both conforming and jumbo rates, providing borrowers with a broader view of mortgage conditions.
After a four-week flat spot (at or near 2015 lows) mortgage rates have started to tick upward again, so volatility is back, at least some degree. That said, there are no indications that we’ll be breaking any new ground for rates anytime soon, but we do expect to see more volatility next week as a wide range of new economic data is due. If there is a upturn in strength in the ISM service-business report and/or if Friday’s employment report rebounds more strongly than expected, we could have some additional space to move to the upside. With those yet unknown, we’ll look for another six basis point lift (or perhaps a touch more) in our FRMI by the time the week is through.