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Mortgage rates fell to a 16th record low of the year after a 4 basis points fall to a 15th record low in the previous week.
Compared to this time last year, 30-year fixed rates were down by 108 basis points.
30-year fixed rates were also down by 228 basis points since November 2018’s most recent peak of 4.94%.
Economic Data from the Week
Economic data was on the busier side in the 1st half of the week.
November personal spending, inflation, and core durable goods orders, together with consumer confidence and jobless claims figures were in focus.
It was a mixed bag on the economic data front. Consumer confidence waned in December, while initial jobless claims fell from 892k to 805k.
The annual rate of core inflation held steady at 1.4%, while personal spending fell by a larger than expected 0.4%.
Durable goods and core durable goods orders continued to rise, however, following October’s jump, supporting riskier assets.
From Capitol Hill, progress towards a COVID-19 stimulus package was risk positive, while continued concerns over COVID-19 and news of new strains tested support in the week.
Later in the week, U.S President Trump refused to sign the COVID-19 stimulus package. Hopes of a better package supported riskier assets mid-week before news of lawmakers refusing Trump’s demands hit the wires.
Freddie Mac Rates
The weekly average rates for new mortgages as of 24th December were quoted by Freddie Mac to be:
30-year fixed rates fell by 1 basis point to a new low of 2.66% in the week. This time last year, rates stood at 3.74%. The average fee remained steady at 0.7 points.
15-year fixed rates fell by 2 basis points to 2.19% in the week. Rates were down by 100 basis points from 3.19% a year ago. The average fee fell from 0.6 points to 0.5 points.
5-year fixed rates held steady at 2.79% for a 2nd consecutive week. Rates were down by 66 points from 3.45% a year ago. The average fee fell from 0.3 points to 0.2 points.
According to Freddie Mac,
The housing market is set to finish the year strong as low mortgage rates continue to fuel homebuyer demand.
Refinance activity also remains robust with mortgage rates at record lows.
Looking ahead to 2021, Freddie Mac expects rates to hold steady. A key driver, in the near-term, however, will be the trajectory of the COVID-19 pandemic and the execution of the vaccine.
Mortgage Bankers’ Association Rates
For the week ending 18th December, the rates were:
Average interest rates for 30-year fixed to conforming loan balances increased from 2.85% to 2.86%. Points remained unchanged at 0.33 (incl. origination fee) for 80% LTV loans.
Average interest rates for 30-year fixed, backed by the FHA, decreased from 2.96% to 2.90%. Points fell from 0.42 to 0.32 (incl. origination fee) for 80% LTV loans.
Average 30-year rates for jumbo loan balances decreased from 3.12% to 3.10%. Points decreased from 0.33 to 0.29 (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 by 0.8% in the week ending 18th December. In the week prior, the Index had risen by 1.1%.
The Refinance Index increased by 4% and was 124% higher than the same week a year ago. In the week prior, the index had risen by 1%.
The refinance share of mortgage activity rose from 72.7 to 74.8%. In the previous week, the share had increased from 72.0% to 72.7%.
According to the MBA,
Mortgage rates are closing the year at record lows, with the 30-year fixed rate – at 2.86% – a full percentage point below a year ago.
Purchase applications fell for the 2nd time in 3-weeks, though remained 26% higher than the same week a year ago.
The average loan balance reached another record high.
Numbers for the week ending 25th December and 1st January will be available on 6th January 2021.
For the week ahead
It’s a relatively quiet 1st half of a shortened week on the U.S economic calendar.
Key stats include November trade data and December Chicago PMI figures. We don’t expect too much influence from the stats, however.
COVID-19 news updates and market sentiment towards the COVID-19 stimulus package will likely remain key drivers.
This article was originally posted on FX Empire