Mortgage rates have fallen below 4% following the prior weeks’ national jobs data, geopolitical tensions and President Trump’s strong-dollar stance that eroded 2017’s rate peaks. Nevertheless, the French presidential elections and POTUS’s tax reform plan left mortgage rates pretty much unchanged pending the outcome of these events.
Last Week’s Survey Results
Per Freddie Mac’s Primary Mortgage Market Survey® on prevailing conventional mortgage rates for the week ended April 20, the 30-year fixed-rate mortgage was down from 4.08% to 3.97%. The average 15-year fixed mortgage rates also slid further to 3.23% from the preceding week’s 3.34%. The rates on 5-year hybrid adjustable-rate mortgages averaged 3.10% from 3.18%.
“Weak economic data and growing international political tensions are driving investors out of riskier sectors and into Treasury securities. This shift in investment sentiment has propelled rates lower,” explained Freddie Mac chief economist Sean Becketti in the accompanying media release.
The Week Ahead for Mortgage Rates
The markets are widely anticipating the French presidential elections on Sunday. The round 1 results are in with far-right candidate Marine Le Pen and youthful outsider Emmanuel Macron of the En Marche movement heading to round 2 this May 7.
Investors are keen on the impact of Le Pen’s win. She is against immigration and has touted nationalist economic policies that could mean a break from the European Union who, through free trade, is supported by Macron.
A Le Pen victory, according to Mortgage News Daily, would be “good for bonds and bad for stocks because she’s seen as a potential risk to the long-term stability of the European Union.”
Back in the U.S., markets are awaiting the President’s tax reform package, which will include a “massive tax cut” for individual and business taxpayers to be unveiled this week. After the announcement was made via the Associated Press, bond yields which drive mortgage rates and stocks moved higher.
Bonds and stocks seem to be in a holding pattern as they await for economic stimulus such as tax reform, said Mortgage Market Guide. “Any good news will be detrimental to mortgage bond and treasury prices especially given that mortgage bonds are at a 5-month high.”
Advice for the Wise
These events – the French voting results and Pres. Trump’s massive tax cuts – will contribute to the volatility of mortgage rates in the coming days. Locking in today’s mortgage rates remains a good option for mortgage shoppers. Even if rates were to rise, they are at their lowest since November. Locking now would secure rates while they are still lower.
If you insist on floating, keep your eyes on the markets. As one loan originator at Mortgage News Daily advised, float until you are within 15 days of closing.