Mortgage Rates Moving Up as Fed Confirms New Chair, Markets Watch GDP and NAFTA
The average prime 30-year fixed mortgage rate quoted on Zillow increased almost 10 basis points to 3.98 percent over the past week, rising to its highest level since March 2017 and breaching the psychologically important 4 percent threshold over the weekend.
Rates have increased decisively in two of the past three weeks and the momentum is clearly upward. The past week’s increase preceded the federal government shutdown on Friday evening and, although rates have retreated slightly from their weekend high, they remain above where they stood in the middle of last week and more than 20 basis points higher than the start of the year.
Jerome Powell was confirmed as Fed Chair this week, an outcome that had been widely anticipated and is not expected to dramatically alter the path of interest rates moving forward. Congress also held confirmation hearings for Federal Reserve nominee Marvin Goodfriend, whose academic research suggests monetary policy views that are different from those that have prevailed on the Federal Open Market Committee in recent years. Markets interpreted his testimony as more in line with the recent consensus than had been expected.
Friday’s Q4 Gross Domestic Product (GDP) data are the most important data scheduled for release this week, although markets also are likely to follow developments in NAFTA negotiations. If negotiations suggest a breakdown of the trade pact, rates could move higher.
