We saw mortgage rates dip a little lower on Friday after trouble in Turkey led financial market participants to seek out the perceived safety of long-term government bonds.
Mortgage rates are expected to stay close to current levels this week, but we could see some movement after a few key economic reports get released. Read on for more details.
Where are mortgage rates going?
Rates hold lower to start the week
It’s a quiet start to the week as there are no significant economic reports scheduled for release. That’s keeping long-term government bond yields, which dropped due to an increased demand on Friday after trouble for Turkey’s lira, down near three week lows.
The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) is currently at 2.88%. That’s basically flat on the day and about six basis points lower from where it was this time last week.
The expectation for this week is the same as it’s been for quite some time, and that’s for current mortgage rates to stay close to present levels. The fact that rates have remained in a tight range all summer (and most of spring) really isn’t the worst thing for borrowers, as many forecasters had expected rates to rise higher than they are now by this time.
The pressure isn’t off quite yet, though, as it is widely anticipated that the Federal Reserve will increase the nation’s benchmark interest rate, the federal funds rate, by at least a quarter-point by the time 2019 rolls around.
According to the CME Group’s Fed Funds futures, there is a 96.0% chance that the federal funds rate will go up a little over a month from now at the FOMC’s September meeting.
That would push the target range up a quarter-point to 2.00%-2.25%. There is still a lot of time between now and December, but at the moment the majority of analysts believe another rate hike will take place then, pushing the fed funds target range up to 2.50%-2.75%.
Lock now before move even higher
With mortgage rates expected to rise in the coming months, we believe the prudent decision for most borrowers is to lock in a rate sooner rather than later. The longer you wait, the more likely it is that you’ll get a higher rate and pay more interest on your purchase or refinance.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
- Nothing out today.
Notable events this week:
- NFIB Small Business Optimism Index
- Import and Export Prices
- Retail Sales
- Empire State Mfg Survey
- Productivity and Costs
- Industrial Production
- Housing Starts
- Jobless Claims
- Philly Fed Business Outlook Survey
- Consumer Sentiment
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