Mortgage rates were on the rise for the 1st time in 3 weeks, after having hit a new record low in the week prior.
30-year fixed rates increased by 8 basis points to 2.96% in the week ending 13th August.
In the week prior, 30-year fixed rates had fallen by 11 basis points to a new all-time low 2.88%.
Compared to this time last year, 30-year fixed rates were down by 64 basis points.
30-year fixed rates were also down by 198 basis points since November 2018’s most recent peak of 4.94%.
Economic Data from the Week
Economic data was on the lighter side through the 1st half of the week.
Key stats included July’s producer price index and consumer price index figures.
The numbers reflected a pickup in inflationary pressures at the start of the 3rd quarter, with the annual rate of core inflation picking up from 1.2% to 1.6%.
In July, the producer price index increased by 0.6%, reversing a 0.2% decline from June.
Better than expected numbers came off the back of the better than expected jobless claims and nonfarm payroll figures from the week prior.
While the stats were skewed to the positive, there was still no progress on the COVID-19 stimulus package, however. The lack of progress pinned back U.S Treasury yields in the week.
Freddie Mac Rates
The weekly average rates for new mortgages as of 13th August were quoted by Freddie Mac to be:
30-year fixed rates increased by 8 basis points to 2.96% in the week. Rates were down from 3.60% from a year ago. The average fee remained unchanged at 0.8 points.
15-year fixed rates rose by 2 basis points to 2.46% in the week. Rates were down from 3.07% compared with a year ago. The average fee remained unchanged at 0.8 points.
5-year fixed rates held steady at 2.90% in the week. Rates were down by 45 points from last year’s 3.35%. The average fee remained unchanged at 0.4 points.
According to Freddie Mac,
Homebuyer demand remains strong, especially for those in search of entry-level homes. At this level, falling mortgage rates have led to a material improvement in affordability.
Even with this week’s uptick, very low rates are providing a significant boost to the housing market.
The sector continues to hold up well during this time of uncertainty.
Mortgage Bankers’ Association Rates
For the week ending 7th August, rates were quoted to be:
Average interest rates for 30-year fixed, backed by the FHA, declined from 3.27% to 3.23%. Points decreased from 0.42 to 0.33 (incl. origination fee) for 80% LTV loans.
Average interest rates for 30-year fixed with conforming loan balances decreased from 3.14% to 3.06%. Points fell from 0.39 to 0.33 (incl. origination fee) for 80% LTV loans.
Average 30-year rates for jumbo loan balances decreased from 3.51% to 3.40. Points decreased from 0.33 to 0.31 (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, increased 6.8% in the week ending 7th August. In the week prior, the index had decreased by 5.1%.
The Refinance Index increased by 9% and was 47% higher than the same week a year ago. In the week prior, the index had fallen by 7%.
The refinance share of mortgage activity increased from 63.9% to 65.7% in the week ending 7th August. In the week prior, the share had decreased from 65.1% to 63.9%.
According to the MBA,
Mortgage rates fell across the board as investors grew less optimistic of the economic rebound.
Refi activity responded to survey low rates across loan types including 30-year fixed, 15-year fixed, and jumbo.
The refi index hit the highest level since April off the back of the 9% jump in refinances.
Home purchase activity continued its strong run, with a 2% increase over the week. Purchase activity was up by 22% compared with the same week a year ago.
The gradual slowdown in the improvement in the job market and tight housing inventories remain a concern near-term, however.
For the week ahead
It’s a relatively quiet 1st half of the week on the U.S economic calendar.
Key stats include NY Empire State Manufacturing figures for August and July Building permit and housing start figures.
While we can expect some influence from the numbers, the focus will remain on the COVID-19 stimulus package.
Updates from the U.S – China trade talks will also have an impact on U.S Treasury yields.
This article was originally posted on FX Empire