July 2, 2022
  • July 2, 2022
  • Home
  • Forex Rates
  • Mortgage rates avoid 4th consecutive weekly drop as COVID-19 pushes yields back

Mortgage rates avoid 4th consecutive weekly drop as COVID-19 pushes yields back

By on May 2, 2021 0

Mortgage rates avoided fourth consecutive weekly hike in week ending 29e April. After falling 7 basis points from the previous week, fixed 30-year rates rose 1 basis point to 2.98%.

Compared to the same period last year, fixed 30-year rates fell 25 basis points.

Fixed 30-year rates were still down 196 basis points since the last peak in November 2018 at 4.94%.

Notably, mortgage rates have stayed lower before; the 3% mark.

Economic data of the week

The first half of the week was relatively calm on the US economic calendar.

Key statistics included basic durable and durable goods and consumer confidence figures.

The statistics were biased towards the positive, supporting the optimistic economic outlook.

Core durable goods rose 1.6% to reverse a 0.3% decline from February, as durable goods rose 0.5%.

More importantly, the CB Consumer Confidence Index fell from 109.0 to 121.7 in April, indicating a continued recovery in consumption.

On the monetary policy front, the FED was also in action on Wednesday. In line with market expectations, the Fed left its policy unchanged, while reassuring the markets that there would be no change in its current position.

Freddie Mac Pricing

Average weekly rates for new mortgages at 29e April was cited by Freddie mac to be:

  • 30-year fixed rates rose 1 basis point to 2.98% on the week. This time last year, rates stood at 3.23%. The average commission remained stable at 0.7 points.
  • The 15-year fixed rose by 2 basis points to 2.31% over the week. Rates fell 46 basis points from 2.77% a year ago. The average commission went from 0.6 point to 0.7 point.
  • 5-year fixed rates fell 19 basis points to 2.64%. Rates fell 50 points from 3.14% a year ago. The average commission remained unchanged at 0.3 points.

According to Freddie Mac,

  • The upward trend in US Treasury yields stopped a month ago due to the rise in COVID-19 cases around the world.
  • Yields have remained within a narrow range as markets digest incoming economic data.
  • The good news is that with rates below 3%, refinancing remains attractive to many borrowers who financed before 2020.
  • But for avid buyers, especially first-time home buyers, stocks continue to be extremely tight.
  • Competition for homes available for purchase remains high.

Mortgage Bankers Association rate

For the week ending 23rd April, the rates have been:

  • The 30-year average interest rates on compliant loan balances fell from 3.20% to 3.17%. Points increased from 0.36 to 0.30 (including set-up fees) for 80% LTV loans.
  • FHA-backed 30-year average fixed mortgage rates fell from 3.15% to 3.12%. Points increased from 0.31 to 0.24 (including set-up fees) for 80% LTV loans.
  • The 30-year average rates for jumbo loan balances fell from 3.34% to 3.28%. Points increased from 0.29 to 0.30 (including set-up fees) for 80% LTV loans.

Weekly figures released by the Mortgage Bankers Association showed that the Composite Market Index, which is a measure of the volume of mortgage applications, fell 2.5% in the week that ended 23.rd April. Over the previous week, the index had risen 8.6%.

The refinancing index slipped 1.0% and was 18% lower than the same week a year earlier. The index had jumped 10.0% the week before.

In the week ending 23rd In April, the refinancing share of mortgage activity fell from 60.0% to 60.6%. During the previous week, the share had fallen from 59.2% to 60.0%.

According to the MBA,

  • Mortgage applications fell last week even with mortgage rates falling for a 3rd consecutive week.
  • The 30-year fixed rate was down 3 basis points to 3.17%, still 32 basis points higher than the low recorded in December 2020.
  • Even with a few weeks of lower rates, borrowers have probably already refinanced. This is why activity has declined in seven of the past eight weeks.
  • The recent downturn in the buying market comes despite a strengthening economy and labor market.
  • Activity is still above year-old levels, but accelerating house price growth and low inventories have led to lower purchase requests in four of the past five weeks.

For the coming week

It’s a busier first half of a week on the US economic calendar. The market-preferred ISM private sector PMIs are expected along with ADP’s non-farm employment development figures.

Following impressive statistics from the United States last week, another string of positive numbers could push yields north.

However, much will depend on the COVID-19 vaccination front and the ability of governments to curb the current upward trend in new COVID-19 cases.

On the monetary policy front, Fed Chairman Powell is expected to speak earlier this week, which will also generate a lot of interest.