Mortgage rates ease as yields dip ahead of inflation report

The average interest rate on a 30-year, fixed-rate mortgage moved lower on Tuesday as U.S. Treasury yields softened in the run-up to Friday’s federal inflation report, offering a brief pause in a stretch of rising home-loan costs.

The 30-year fixed rate dropped to 6.65% APR in Tuesday morning readings supplied to a leading personal-finance publisher by an online real-estate marketplace, down 17 basis points from Monday. Lenders’ postings varied widely across the market, and the same publisher cautioned that the day’s move should not be read as the start of a broader downward trend.

A separate rate feed used by a national business magazine, drawing on data from Mortgage Research Center, put the average 30-year fixed conforming rate at 6.792% on Monday, up from 6.759% the day before. The 15-year fixed conforming rate stood at 5.983%, up from 5.946%. The average rate on a 30-year jumbo loan was 6.830%, up from 6.799%, and the average rate on a 30-year FHA loan was 6.158%, up from 6.137%.

Financial markets remain split over whether the Federal Reserve will raise its benchmark rate at its meeting next week, though a slightly larger share of market participants expects a hike. Concerns about the war between the U.S. and Iran are feeding into that outlook: oil prices approached $100 a barrel Tuesday morning as fighting in the Strait of Hormuz continued, adding to inflationary pressures that businesses may pass through to consumers.

Mortgage rates track most closely with the yield on the 10-year Treasury note. Fears that the Iran conflict will impede trade, drive up oil prices and stoke overall inflation have kept those yields elevated, which in turn has kept mortgage rates high. Tuesday’s pullback in yields ahead of the government’s next inflation reading, due Friday, produced the day’s modest decline.

For homebuyers and homeowners considering a refinance, the two data feeds together underscore how much lenders diverge from one another on any given day. Shopping multiple lenders — rather than accepting the first rate offered — remains the most reliable way to secure the best available terms in a market where daily volatility is being driven largely by inflation expectations and geopolitical risk.

Filed under: Aiken SC Business News