U.S. mortgage rates remained largely static early Tuesday, with the benchmark 30-year fixed rate hovering near recent levels as financial markets awaited a series of key economic reports. According to Bankrate's latest survey, the average rate for a 30-year fixed mortgage stood at 6.28%, showing minimal movement from the prior session. The accompanying annual percentage rate, which incorporates lender fees, was reported at 6.34%.
Shorter-term borrowing costs also held steady. The average rate for a 15-year fixed mortgage was recorded at 5.57%, while the average for a 30-year fixed-rate refinance was higher at 6.55%. This stability arrives at a critical juncture for the housing market, with the spring selling season approaching. Prospective buyers continue to face elevated home prices, while many existing homeowners remain reluctant to list their properties, unwilling to relinquish mortgages secured at significantly lower rates from previous years.
Mortgage pricing dynamics are primarily influenced by the bond market, rather than the Federal Reserve's direct policy rate decisions. Rates tend to follow the yield on the 10-year Treasury note and the pricing of mortgage-backed securities (MBS), which are pools of home loans that lenders use to manage risk. On Monday, the 10-year Treasury yield closed at 4.189%, a slight decline from its intraday high, contributing to the muted rate environment.
Other industry metrics reflected similar calm. Mortgage News Daily's index for top-tier 30-year fixed loans showed a negligible increase to 6.16%. Separately, data from Optimal Blue indicated the average rate for a conforming 30-year mortgage was approximately 6.083%, based on locks through February 6th. Analysts note that such lock data can lag behind real-time movements in the bond markets.
Market participants are focusing intently on upcoming economic data for signals on the direction of inflation and labor costs. Reports on the employment cost index and trade prices were scheduled for release Tuesday. The spotlight, however, is firmly on the delayed January jobs report, now expected Wednesday, and the January Consumer Price Index (CPI) due Friday. Analysts, including Matthew Graham of Mortgage News Daily, have emphasized that the jobs data carries substantially more weight for the interest rate outlook than recent secondary employment figures.
Any indications of persistent wage growth or inflationary pressures could propel long-term bond yields higher, subsequently lifting mortgage rates regardless of the Federal Reserve's current pause on rate hikes. Such a scenario would further pressure housing affordability and likely suppress refinancing activity. In related market movements, shares of Rocket Companies (RKT), a major mortgage originator, advanced 3.8% in premarket trading Tuesday.
The broader policy landscape adds another layer of uncertainty. Political calls for lower mortgage rates coexist with debates over the Federal Reserve's balance sheet composition. Some economists caution that a rapid reduction in the Fed's holdings of Treasury and mortgage-backed securities could exert upward pressure on borrowing costs. Former Fed official Bill English highlighted this tension, questioning how a smaller central bank balance sheet could align with the goal of reduced mortgage rates.
Investors also monitored related exchange-traded funds. The iShares MBS ETF (MBB), which tracks the agency mortgage-backed securities market, ended Monday's session unchanged. The SPDR S&P 500 ETF (SPY) posted a modest gain, while the iShares 20+ Year Treasury Bond ETF (TLT) edged slightly lower. The financial markets remain in a holding pattern, with mortgage rates poised to react to the imminent influx of high-stakes economic data.
