Mortgage rates held steady in the week ending 3rd October. 30-year fixed rates rose by just 1 basis point to 3.65%, following a basis point fall in the week prior.
In spite of the rise, 30-year rates remained close to levels last seen in early November of 2016, according to figures released by Freddie Mac.
Compared to this time last year, 30-year fixed rates were down by 106 basis points.
More significantly, 30-year fixed rates were down by 129 basis points since last November’s most recent peak of 4.94%.
Economic Data from the Week
Through the week, disappointing manufacturing and service sector PMI numbers from the U.S and elsewhere weighed on yields.
The weak economic data led to a pullback in U.S Treasury yields, ultimately pinning back U.S mortgage rates. In the week, the stats suggested that more action may be needed on the monetary policy front to support the economy.
Post-release of the weekly rates, nonfarm payrolls, and wage growth also disappointed on Friday. One silver lining, however, was a fall in the U.S unemployment rate from 3.7% to 3.5%.
Freddie Mac Rates
The weekly average rates for new mortgages as of 3rd October were quoted by Freddie Mac to be:
- 30-year fixed rates increased by 1 basis point to 3.65% in the week. Rates were down from 4.71% from a year ago. The average fee remained steady at 0.6 points.
- 15-year fixed rates fell by 2 basis points to 3.14% in the week. Rates were down from 4.15% from a year ago. The average fee held steady at 0.5 points.
- 5-year fixed rates remained unchanged at 3.38% in the week. Rates were down by 63 basis points from last year’s 4.01%. The average fee remained unchanged at 0.4 points.
According to Freddie Mac, overall mortgage demand remained strong as mortgage rates held steady in the week.
Demand was up by over 50% year on year thanks to increases in both refinance and purchase mortgage applications.
Freddie Mac also noted that, as economic growth decelerates, low mortgage rates will continue to support the mortgage market and expect the trend to continue through the remainder of the year.
Mortgage Bankers’ Association Rates
For the week ending 27th September, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.90% to 3.79%. Points held steady at 0.23 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances fell from 4.02% to 3.99%. Points remained unchanged at 0.38 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances decreased from 4.00% to 3.98%. Points increased from 0.26 to 0.28 (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 8.1% in the week ending 27th September. In the week ending 20th September, the Market Composite Index had tumbled by 10.1%.
The Refinance Index jumped by 14% in the week ending 27th September, leaving the index up by 133% from the previous year. The Index had fallen by 15% in the week ending 20th September.
The share of refinance mortgage activity increased from 54.9% to 58.0%, following a fall from 57.9% to 54.9% in the week prior.
According to the MBA, 30-year fixed rates fell below 4% for the 6th time in the past 9-weeks. Lower mortgage rates supported the uptick in refinancing activity.
August and September were the strongest months for refinancing since October 2016, while refinance applications were lower in September, compared with August.
Activity continues to be particularly sensitive to the slightest of changes to mortgage rates.
The MBA noted that purchase applications also rose and remained more than 9% higher than a year ago. Low mortgage rates and healthy housing market fundamentals continue to support solid levels of purchase activity.
For the week ahead
It’s a quieter week on the economic data front.
Key stats include September inflation figures due out on Tuesday and Thursday and August’s JOLTs job openings on Wednesday.
While we can expect the inflation figures to have an impact on mortgage rates, geopolitical risk will likely have the greatest influence.
U.S – China trade talks in the week will have a material effect on risk sentiment. There’s also Brexit and impeachment chatter to keep the markets busy throughout the week.
This article was originally posted on FX Empire
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