Mortgage Rates Friday, June 16: Mostly Higher as Bond Market Considers Fed Moves

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Mortgage rates for 30-year and 15-year fixed home loans moved higher, while 5/1 ARMs were unchanged today, according to a NerdWallet survey of mortgage rates published by national lenders Friday morning.

The bond market, the major driver of mortgage rates, is still digesting the Federal Reserve’s latest meeting. It’s less about the everybody-knew-it-was-coming rate hike and more about the Fed’s announcement regarding its balance sheet.

The central bank said it would begin trimming its massive holdings in Treasurys and mortgage-backed securities, perhaps as soon as later this year. The Fed bought the positions beginning in 2008, in an effort to resuscitate a housing-crisis-crippled economy.

In an analysis released this morning, Matt Freund, co-chief investment officer of Calamos Investments, called the Fed’s plan “an unprecedented endeavor to impact both short and long rates simultaneously.”

Brian Wesbury, chief economist, and Robert Stein, deputy chief economist of First Trust Advisors, say the strategy would have a significant impact on long-term bonds.

“We think long-term Treasury yields will be moving up significantly later this year, with a 3% target for the 10-year Treasury Note by the end of the year,” Wesbury and Stein wrote in an analysis Thursday.

The yield on the 10-year Treasury serves as a benchmark for mortgage rate trends. Based on current interest rate spreads, a 3% yield on the 10-year Treasury could indicate mortgage rates of somewhere between 4.5% and 5%.

The 10-year yield early today was near 2.15%.

MORTGAGE RATES TODAY, FRIDAY, JUNE 16:

(Change from 6/15)
30-year fixed: 4.02% APR (+0.04)
15-year fixed: 3.44% APR (+0.02)
5/1 ARM: 3.85% APR (NC)


NerdWallet daily mortgage rates are an average of the published annual percentage rate with the lowest points for each loan term offered by a sampling of major national lenders. APR quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

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Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: hal@nerdwallet.com. Twitter: @halmbundrick.

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