Mortgage rates have hovered near their all-time lows for months. While economists expect a rate hike by the end of the year, mortgage interest rates have fallen into a pattern: they rise, fall, then repeat. Here’s a look at what could move the markets this week.
On Tuesday, the S&P CoreLogic Case-Shiller Home Price Index for July will be released. In June, the index showed a year-over-year increase in house prices of 18.6%, a new record – and which even eclipsed the boom years of the housing bubble.
Also Tuesday, the latest Conference Board consumer confidence index is released.
The reports themselves do not determine mortgage rates, but the statistics do reflect the state of the housing economy, characterized by record inventories and soaring house prices.
Weekly jobless claims data are also on the horizon Thursday. And, as always, mortgage rates and 10-year government bond yields will be joined at the hip.
Mortgage rates go up and down based on market sentiment, headlines and various economic indicators. The calculations behind the rates are complicated, but here’s a simple rule: The 30-year fixed rate mortgage closely tracks the yield of the 10-year Treasury. When that rate rises, so does the popular 30-year fixed rate mortgage.
Fixed rate mortgage rates are influenced by other factors, such as supply and demand. When mortgage lenders have too much business, they raise rates to decrease demand. When business is light, they tend to cut rates to attract more customers.
Ultimately, the rates are set by the investors who buy your loan. Most US mortgages are packaged in the form of securities and resold to investors. Your lender offers you an interest rate that secondary market investors are willing to pay.