Heading into June we are focused on three key areas that may impact mortgage rates heading into summer.
June 2019 mortgage rate watch
- The Economy: More than ever it’s about the economy. It seems like we moved from everything is great to fears that recession is going to happen in the next 12-18 months. Mortgage-Backed Securities will most likely take their biggest cue from the data reports issued throughout the month. And during the first week of June, we have some big ones.
- The Fed: Remember December 2018 when the Fed hiked rates? Now we’re hearing analysts say the Fed is going to have to lower two-three times in 2019. It’s a complete change from fall/winter 2018 when everyone was thinking 2019 was going to be a great year and that the Fed may have to hike 2-4 times during the year.
- China, Mexico, and Europe: News out of China, Mexico, and Europe could be the “tape bombs” that send Mortgage-Backed Securities higher (and mortgage rates). We’ve had a lot of bond/mortgage rate-friendly news lately and at some point, the news cycle will change. We’ll be keeping an eye on the developments that may impact mortgage rates as we move into June.
June 2019 Mortgage Rate Economic Calendar
Below are the important dates for economic reports that may affect the Mortgage-Backed Securities market and mortgage rates. As we move closer and into April we’ll update the Calendar.
- June 03: ISM Manufacturing PMI May, Construction Spending April
- June 04: ISM New York Index May
- June 05: Mortgage Market Index, ISM Non-Manufacturing PMI May and ADP Employment Report
- June 06: Weekly Jobless Claims
- June 07: BLS Employment report, Wholesale Sales, Wholesale Inventories, and Consumer Credit.
- June 11: Core Producer Prices May
- June 12: Core CPI May
- June 13: Export Prices and Import Prices May 2019
- June 14: Retail Sales May, 1yr and 5yr Inflation Outlook
- June 17: NY Fed Manufacturing, NAHB Housing Index
- June 18: Housing Starts, Building Permits
- June 19: FOMC Decision, Weekly Mortgage Market Index
- June 20: Philly Fed Index, Weekly Jobless Claims
- June 21: Existing Home Sales
- June 25: New Home Sales, Consumer Confidence, Case Schiller
- June 26: Weekly Mortgage Market Index, Durable Goods
- June 27: Weekly Jobless Claims, Final Q1 2019 GDP reading
- June 28: Core PCE, Personal Income, Chicago PMI
- BLS Employment Report
- ISM Manufacturing PMI
- Core CPI
The above three reports tend to have the most influence over the Mortgage-Backed Securities Market and mortgage rates. Additional “important” reports include Retail Sales and Durable Goods
Mortgage rate forecast for June 2019
Heading into April mortgage rates are near a two-year low. Between March 20 and March 21 mortgage rates improved a full .25%. That size of a move is rare in that short of time. It’s clear that Mortgage-Backed Securities and mortgage rates are in a good position heading into the first month of Q2. If mortgage rates hold the levels seen post-Fed meeting I would expect to see a significant increase in mortgage application volume. If that happens then mortgage rates may stall at these levels due to lenders reaching capacity. A mortgage company can only process so many applications at one time. Since 2017 mortgage companies have been cutting staff due to a long-term decline in mortgage application volume. When they see a significant increase in applications mortgage companies have little to no incentive to improve mortgage rates even if the Mortgage-Backed Securities market improves. We anticipate mortgage rates will remain near their two-year lows during the month of June.
June 2019 mortgage rate average expectations
- The average 30 year fixed mortgage rate for June 2019 is anticipated to be below: 4.125%
- The average 20 year fixed mortgage rate for June 2019 is anticipated to be below: 3.875%
- The average 15 year fixed mortgage rate for June 2019 is anticipated to be below: 3.50%*the mortgage rate averages are averages anticipated by JB Mortgage Capital, Inc.; these are not national survey numbers.
Monthly Mortgage Rate Summary
May 2019 Mortgage Rates
The 10y Treasury yield started off the month above 2.50%, and outside of a few days mid-May the yield on the 10 year Treasury moved lower as fears of an all-out trade war with China persisted and a significant economic slowdown in Europe emerged.
However, Mortgage-Backed Securities were noticeably absent from following the significant gains in the Treasury market. While we did see improvements in MBS they were very small (and frustrating) improvements. Despite Treasury yields moving to multi-year lows, MBS were noticeably below the best levels of 2019 until the very end of the month.
During the last few days of the month, there was a noticeable increase in the rhetoric from China about the trade war with the United States. Along with new tariffs being placed on Mexico cause the Treasury bond market to have one of the best rallies of 2019; pushing the 10y yield below 2.15%.
April 2019 Mortgage Rates
Mortgage rates started off the month at great levels only to move higher as the month went on. After reaching near two-year lows; mortgage rates pushed higher as investors moved out of bonds and into stocks.
Towards the end of the month, the bond market improved and so did mortgage rates.
March 2019 Mortgage Rates
Mortgage Rates For March 2019 remained range-bound up until the afternoon of Wednesday, March 20, 2019. Post Fed announcement (on the 20th) mortgage rates moved to new lows as the Fed expressed concern about the economy, announced there would be no hikes in 2019, and confirmed that their balance sheet reduction program was coming to an end.
On our Fed meeting March 2019 page we go into more detail about the events of the day. Post-Fed meeting the 10y Treasury yield moved below 2.58% and Mortgage-Backed Securities rallied past their range ceiling.
March 22, 2019 mortgage rates continued to improve as dismal data from Germany sent their 10y yield below 0.00%. Heading into the last week of March 30 year fixed mortgage rates were below 4.125% (conforming).
February 2019 Mortgage Rates
Mortgage rates for February 2019 are range-bound for the most part (as of February 18th, 2019). Earlier in the month there was a very strong jobs report that caused Mortgage-Backed Securities to sell off and it pushed mortgage rates higher. After the initial push higher mortgage rates settled and moved back to near their previous lows as housing data continues to disappoint and most recently the Retail Sales report for December 2018. It was one of the worst Retail Sales reports in nearly 10 years and left many analysts and investors wondering if the economy is slowing faster than anticipated.
February 2019 mortgage rates remain near their one-year lows heading into the last few weeks of the month. Keep an eye on trade negotiations with China. A positive outcome might push mortgage rates higher and a negative outcome might push mortgage rates lower.
As we finished out February mortgage rates started to move up after a stronger than expected GDP report. On the last day of February mortgage rates were still within their range however continued selling into the first full week of March might push mortgage rates above the current range.
January 2019 Mortgage Rates
January 2019 was a great month for mortgage rates. Mortgage-Backed Securities started rallying in November and it picked up steam in December and pushed mortgage rates near their one-year lows in January. Weaker economic data, trade tensions with China, and the Government Shutdown were the three main issues the economy was facing. Investors eventually reversed course and pushed bond yields and mortgage rates higher however the bounce from the bottom was not that significant. January 2019 mortgage rates set the stage for February 2019 as fixed mortgage rates remained well within their range during the month. Only until the last few days did we see a serious risk of that range being broken.
