Mortgage rates have hovered near all-time lows for months. While economists expect rates to rise by the end of the year, interest rates on home loans have fallen into a pattern: They rise, retreat and then repeat. Here’s a look at what could move markets this week.
On Monday, the National Association of Realtors will release its report on existing home sales for July. And on Tuesday, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development will issue a joint report on new home sales for last month.
The reports themselves don’t drive mortgage rates, but the stats reflect the state of the housing economy — which has been characterized by record-low inventories and soaring home prices.
Also on the horizon are weekly jobless claims data on Thursday. And, as always, mortgage rates and yields on 10-year government bonds will be joined at the hip.
Mortgage rates rise and fall based on market sentiment, headlines and a variety of economic indicators. The math behind rates is complicated, but here’s one easy rule of thumb: The 30-year fixed-rate mortgage closely tracks the 10-year Treasury yield. When that rate goes up, the popular 30-year fixed rate mortgage tends to do the same.
Rates for fixed mortgages 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, rates are set by the investors who buy your loan. Most U.S. mortgages are packaged as securities and resold to investors. Your lender offers you an interest rate that investors on the secondary market are willing to pay.