The average 30 year fixed rate fell below 3.70% for the first time since February 12 and the lowest for the entire month of March, this according to Freddie Mac’s weekly mortgage rate survey.
The 30 year fixed rate fell from 3.78% to 3.69% and the 15 year rate dropped to 2.97% from 3.06%. One year ago, the 30 year stood at 4.40%, about seventy-one basis points above where it is now.
It was a twist and a return to a more traditional reaction to economic events. In other words, rates typically improve on bad economic news.
The Dow has taken several hits over past days, reaching a low for the year on Thursday. This caused investors to pull money away from equities and into bonds, including mortgage bonds. Fed Chair Janet Yellen commented last week that an increase in wholesale and retail inflation, sans food and energy, doesn’t necessarily have to meet the 2.00% inflation target. Again, mixed signals. Wholesale inflation, or PPI, dropped yet again for the month of February.
The first quarter of the year will end on Tuesday, March 31 which will precede quarterly earnings reports. Before that however, the unemployment report will be released this Friday, which is also Good Friday and markets will be closed. Any jobs numbers will be digested over the weekend so many are thinking any surprise number will still allow enough time for investors to parse the data and trade with less volatility on Monday.
If non-farm job creation for March is in the 250,000 range, something investors have gotten used to, there might not be much reaction. Anything over 300,000 is another story.
Interest rate watchers are now looking at a September move to increase short term interest rates by the Fed at the earliest. Recent comments by the Fed and others indicated some were expecting a rate increase as early as June. So far, rates have reacted casually without any strong upward movement.
It’s quite possible, though by all means not a guarantee, that mortgage rates will still trend below 4.00% at least for the next several weeks. Any significant rate drop will likely be short-lived and not very deep.