What may impact mortgage rates this week

This week is packed with economic indicators that may impact the direction of mortgage interest rates, which have been nudging higher. Mortgage rates are based on bonds (mortgage backed securities or “MBS”).  When the stock market is doing well, it’s not unusual to see mortgage rates trend higher as investors will trade the safety of bonds for the potentially higher return found with stocks. The reverse tends to also hold true – if stocks are tumbling, mortgage rates often improve as investments are moved to bonds. Signs of inflation will also deteriorate bond pricing and cause mortgage rates to move higher.

Earlier today, the Personal Consumer Expenditures (PCE) were released with data that was within expectations.

Tomorrow the two day Fed meeting kicks off and we’ll learn on Wednesday if the FOMC will increase the Fed Funds rate. At this point, it is anticipated that the Fed will leave the funds rate unchanged.

On Friday morning, the Jobs Report will be released where it is anticipated that 190,000 non-farm payroll jobs were added in April. If the Jobs Report comes in hotter than expected with significant increases reported on employee income, then we will most likely see mortgage rates react by trending higher. This is because higher incomes indicate inflation (wage inflation) and inflation, as I mentioned earlier, negatively impacts bonds.

If you would like a mortgage rate quote for your refinance or home purchase for a home located in Redmond, Renton, Ravensdale or anywhere in Washington state, I am happy to help you! Click here for a no-hassle mortgage rate quote.

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