Mortgage rates fell for a third consecutive week in the week ending 15th July
Following an 8 basis points decline from the previous week, 30-year fixed rates decreased by 2 basis points to 2.88%.
Since 21st April, 30-year mortgage rates had risen just once beyond the 3% mark before the current pullback.
Compared to this time last year, 30-year fixed rates were down by 10 basis points.
30-year fixed rates were still down by 206 basis points since November 2018’s last peak of 4.94%.
Economic Data from the Week
It was a busier first half of the week on the U.S economic calendar.
Key stats included consumer and wholesale inflation figures for June.
The stats were skewed to the positive, weighing on riskier assets in the week.
U.S inflationary pressures saw a marked pick up at the end of the quarter, raising concerns over FED policy and the economic outlook.
In June, the annual rate of inflation accelerated from 5.0% to 5.4%, with the core annual rate of inflation accelerating from 3.8% to 4.5%.
Wholesale inflationary pressures were also on the rise, pointing to a further pickup in consumer prices near-term. In June, the annual rate of wholesale inflation accelerated from 6.8% to 7.3%.
While the stats weighed on riskier assets, FED Chair Powell testimony to lawmakers looked to ease market tension mid-week.
The FED Chair spoke of the FED’s willingness to allow inflation to run hotter near-term in order to avoid making an erroneous policy decision.
Ultimately, however, market concerns over the resilience of the global economic recovery, a continued rise in new COVID-19 cases globally, and inflation weighed on yields.
Freddie Mac Rates
The weekly average rates for new mortgages as of 15th July were quoted by Freddie Mac to be:
30-year fixed rates fell by 2 basis points to 2.88% in the week. This time last year, rates had stood at 2.98%. The average fee increased from 0.6 points to 0.7 points.
15-year fixed rose by 2 basis points to 2.22% in the week. Rates were down by 26 basis points from 2.48% a year ago. The average fee fell from 0.7 points 0.6 points.
5-year fixed rates fell by 5 basis point to 2.47%. Rates were down by 59 points from 3.06% a year ago. The average fee rose from 0.2 points to 0.3 points.
According to Freddie Mac,
The summer swoon in mortgage rates continues as 30-year fixed rates fell for a 3rd consecutive week.
Since an April peak of 3.18%, rates have declined by 30-basis points.
While the decline is not large, it provides modest relief to borrowers who are purchasing in a market with strong home appreciation and scant inventory.
Mortgage Bankers’ Association Rates
For the week ending 9th July, the rates were:
Average interest rates for 30-year fixed to conforming loan balances decreased from 3.15% to 3.09%. Points decreased from 0.38 to 0.37 (incl. origination fee) for 80% LTV loans.
Average 30-year fixed mortgage rates backed by FHA decreased from 3.17% to 3.15%. Points fell from 0.32 to 0.29 (incl. origination fee) for 80% LTV loans.
Average 30-year rates for jumbo loan balances decreased from 3.20% to 3.16%. Points decreased from 0.28 to 0.27 (incl. origination fee) for 80% LTV loans.
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, jumped by 16.0% in the week ending 9th July. In the week prior, the index had fallen by 1.8%.
The Refinance Index surged by 20% and was 29% lower than the same week a year ago. The Index had fallen by 2% in the previous week.
In the week ending 9th July, the refinance share of mortgage activity increased from 61.6 to 64.1%. The share had had fallen from 61.9% to 61.6% in the previous week.
According to the MBA,
Overall applications climbed last week, driven heavily by refinancing as rates dipped again.
Treasury yields have trended lower over the past month as investors remained concerned about the COVID-19 variant and slowing economic growth.
The fall in mortgage rates for a 2nd consecutive week left 30-year fixed rates at their lowest level since Feb-2021.
While purchase applications increased last week, loan sizes decreased to their lowest level since Jan-2021.
For the week ahead
It’s a particularly quiet first half of the week. Economic data is limited to housing sector stats that should have a muted impact on yields.
The lack of stats will leave COVID-19 news updates and chatter from Capitol Hill to provide yields with direction early in the week.
This article was originally posted on FX Empire
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