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Mortgage rates found support in the week ending 16th January, rising by 1 basis point to 3.65%. In the week ending 9th January, mortgage rates had fallen by 8 basis points to 3.64%.
In spite of the weekly increase, mortgage rates remained close to 14-week lows. 30-year rates also continued to hold 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 80 basis points.
30-year fixed rates are also down by 129 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, with December inflation figures and the NY Empire State Manufacturing Index numbers in focus.
While the annual rate of core inflation held steady at 2.3%, consumer prices rose at a softer pace in December, pinning back yields.
Mixed sentiment towards the phase 1 trade agreement ahead of Wednesday’s signing had also weighed on risk appetite at the start of the week.
It was ultimately risk-on, however, with the signing of the trade agreement and details on tariffs supporting riskier assets.
Easing tensions between the U.S and Iran also supported U.S Treasury yields, delivering the upside in mortgage rates.
Freddie Mac Rates
The weekly average rates for new mortgages as of 16th January 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 4.45% from a year ago. The average fee remained unchanged at 0.7 points.
15-year fixed rates rose by 2 basis points to 3.09 in the week. Rates were down from 3.88% compared with a year ago. The average remained unchanged at 0.7 points.
5-year fixed rates jumped by 9 basis points to 3.39% in the week. Rates were down by 48 basis points from last year’s 3.87%. The average fee held steady at 0.3 points.
According to Freddie Mac, mortgage rates remain low and, supported by a strong labor market, continues to drive a consumer-driven economy. Purchasing power remains key for the economy, though with the worsening homeowner and rental affordability due to supply constraints, some influence on affordability and demand is expected.
Mortgage Bankers’ Association Rates
For the week ending 10th January, rates were quoted to be:
Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.85% to 3.78%, the lowest level since Oct-19. Points rose from 0.23 to 0.30 (incl. origination fee) for 80% LTV loans.
Average interest rates for 30-year fixed with conforming loan balances fell from 3.91% to 3.87, the lowest level since Sep-19. Points decreased from 0.34 to 0.32 (incl. origination fee) for 80% LTV loans.
Average 30-year rates for jumbo loan balances decreased from 3.88% to 3.83%, its lowest level since Nov-16. Points increased from 0.17 to 0.24 (incl. origination fee) for 80% LTV loans.
Applications and Refinancing
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, surged by 30.2% in the week ending 10th January. The composite index had fallen by 1.5% in the week ending 3rd January 2020, compared with 2-weeks prior.
The Refinance Index surged by 43% from the previous week and was up by 109% from the same week one year ago. The Index had fallen 8% from 2-weeks prior in the week ending 3rd January.
The refinance share of mortgage activity increased from 58.9% to 62.9% in the week. In the week prior, the refinance share of mortgage activity had increased from 54.8 to 58.9%.
According to the MBA, the mortgage market got off to a strong start in the new decade. Applications were on the rise across the broader and mortgage rates slid to levels last seen in the 3rd quarter.
Homebuyer activity was up by 8% from a year ago, leading the purchase index to its highest level since Oct-09…
A lack of inventories and upward price pressure driven by demand are negatives near-term, however.
For the week ahead
It’s a quiet week ahead, with key stats due out of the U.S including December existing home sales figures on Wednesday and the weekly jobless claims figures on Thursday.
Barring dire numbers, the stats are unlikely to have too much influence, leaving yields in the hands of corporate earnings.
Outside of the stats, expect geopolitics to continue to give U.S Treasuries direction.
Britain enters its final week as a member of the EU, with Trump’s impeachment trial now underway. Expect any chatter on Iran and the Middle East and trade to also influence. The phase 1 agreement may be in place, but there’s a long way to go before a full-blown trade agreement is reached. Monetary policy will also be in focus, as the PBoC, BoJ, BoC and the ECB deliver their first decisions of the year.
This article was originally posted on FX Empire