It was a wild ride last week in the world of interest rates. While the 30 year fixed rate averaged below 3.80% yet again, it took a while for investors to digest the week’s news.
According to Freddie Mac, the 30 year fixed rate fell by a full eight basis points to 3.78% from 3.86%. Rates bumped higher a couple of weeks ago after the release of the unemployment report for February, highlighting a drop in the unemployment rate as well as respectable job creation. The 15 year dropped from 3.10% to 3.06% while the 1-Yr ARM held steady at 2.46%.
Investors holding stocks as well as bonds were awaiting comments at the end of the most recent FOMC meetings which concluded last Wednesday, looking for any indication of a future rate increase, and they might have gotten a clear signal.
At the conclusion of the previous two FOMC meetings, Fed comments stated they would be patient as it relates to rates and look for growth, employment gains and a path to the Fed’s 2.00% target inflation rate.
Yet the most recent comments removed the “patient” remark and Fed officials expect the Fed Funds rate to hit 0.625% before the end of the year. Still others believe a rate increase of 0.25% will come at the conclusion of the June FOMC meetings.
Mortgage rates have anticipated an initial rate bump for several weeks now as the 30 year rate has climbed from 3.66% last January to 3.86% earlier this month. Mortgage rates climb in anticipation of any future Fed moves.
Of course, nothing is definite and there are so many other things in play. But taken alone, mortgage rates that follow the Fed funds rate would be the natural course.