Mortgage rates for 30-year fixed loans moved lower, while 15-year fixed and 5/1 ARMs crept higher today, according to a NerdWallet survey of current mortgage rates published by national lenders Thursday morning.
The Federal Reserve raised interest rates, and once again mortgage rates shrugged. There seems to be a continuing disconnect between how the Fed views the economy and what the bond market believes.
“The latest rate hike is partly justified from ongoing economic expansion and also a steadily falling unemployment rate,” Lawrence Yun, chief economist for the National Association of Realtors, said in a statement.
But amid the Fed’s generally upbeat view of the economy, Yun issued a warning, saying the Fed should be “mindful” of an interest rate “inversion” — a historic predictor of economic troubles.
“An inversion in interest rates of short-term fed funds being higher than long-term bond yields can easily pull down the economy into a recession. We are getting closer to that inversion point,” Yun said.
Mortgage rates typically mirror the yield trend of the 10-year Treasury. Adam Tumerkan, a research analyst at Stansberry Research, explained the significance of the Fed’s steering short-term rates higher versus the lower-yielding market-driven long-term bond rates in a recent commentary for Seeking Alpha:
“The bond market is pricing in lower growth ahead, possibly recession. Meanwhile, the stock market is believing the Fed and pricing in higher growth and inflation,” Tumerkan wrote. “If the Fed continues on the path of hiking, it will be against the bond market.”
Thirty-year home loan rates have ticked down to their lowest level since Nov. 9, 2016, according to the NerdWallet Mortgage Rate Index.
MORTGAGE RATES TODAY, THURSDAY, JUNE 15:
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.
Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: [email protected] Twitter: @halmbundrick.