by Calculated Risk on 5/19/2015 08:01:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Back Near Recent Highs Ahead of Fed

Mortgage rates continued higher at an unsettling pace today, following an exceptionally strong reading on Residential Construction data. This particular report doesn't historically cause a lot of rate volatility, but it comes at a time when markets are considering the Fed's next move and where any strong showing for the economy increases the odds of a rate hike.

Although the Fed Funds Rate doesn't correlate directly with mortgage rates, this particular rate hike (whenever it happens) will be a major symbolic shift away from the 'emergency' rate levels that haven't budged since 2008. As such, rates are likely to move higher across the board at first. Indeed, much of the recent move higher is due to market participants pricing in their expectations for that sort of big-picture shift. The fact that it coincides with a separate potential big-picture shift in European rates markets is only making things worse.

And yet, rates remain in historically good territory today. Additionally, they haven't been seeing nearly the same sort of freakouts that characterized 2013's taper tantrum. After getting down to 3.875% on Friday, the average lender is now back to quoting conventional 30yr fixed rates of 4.0% on top tier scenarios.
emphasis added

Wednesday:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• During the day: The AIA's Architecture Billings Index for April (a leading indicator for commercial real estate).

• At 2:00 PM: the Fed will release the FOMC Minutes for the Meeting of April 28-29, 2015.