Mortgage rates eased back in the week ending 2nd May. 30-year fixed rates fell by 6 basis points, reversing a 3 basis point rise from the previous week. The 6 basis point fall took 30-year rates to 4.14% according to figures released by Freddie Mac.
Following the weekly fall, 30-year fixed rates stood 41 basis points below levels from 12-months ago.
More significantly, 30-year fixed rates are down by 80 basis points from last November’s most recent peak of 4.94%.
Economic Data from the Week
Economic data released out of the U.S through the first half of the week was on the heavier side. Key stats included the FED’s preferred core PCE price index and personal spending numbers released on Monday.
Softer inflation figures at the start of the week had the most significant impact, in spite of a jump in personal spending.
A jump in consumer confidence in April also influenced ahead of ADP Nonfarm Employment change and ISM manufacturing PMI numbers released on Wednesday.
Better than expected GDP numbers out of the U.S, which raised some red flags over consumption and investment, also influenced at the start of the week.
From outside of the U.S, the private sector PMI numbers out of China disappointed.
On the monetary policy front, the FED held back from suggesting that there would be any need to cut rates later in the year. FED Chair Powell considered the currently softer inflationary environment as transitionary, suggesting that a hold may be more likely through the remainder of the year.
In spite of solid numbers and a more hawkish than expected FED, concerns over the global economy continued to pin back U.S Treasury yields, leading to the fall in mortgage rates in the week.
Freddie Mac Rates
The weekly average rates for new mortgages as of 2nd May were quoted by Freddie Mac to be:
- 30-year fixed rates fell by 6 basis points to 4.14% in the week. Rates were down from 4.55% from a year ago. The average fee held steady at 0.5 points.
- 15-year fixed rates slipped by 4 basis points to 3.60% in the week. Rates were down from 4.03% from a year ago. The average fee eased from 0.5 points to 0.4 points.
- 5-year fixed rates slid by 9 basis points to 3.68% in the week. Rates decreased by 1 basis points from last year’s 3.69%. The average fee held steady at 0.4 points.
According to Freddie Mac, softer inflation and weaker economic data led to a pullback in mortgage rates in the week. Freddie Mac also noted that a combination of lower rates, solid economic growth, softer inflation, and rebounding consumer confidence should deliver strong demand in the coming months.
Mortgage Bankers’ Association Rates
For the week ending 26th April, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, decreased from 4.49% to 4.39%. Points decreased from 0.57 to 0.47 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances decreased from 4.46% to 4.42%. Points increased from 0.44 to 0.46 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances decreased from 4.35% to 4.31%. Points decreased from 0.25 to 0.23 (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, declined by 4.3% in the week ending 26th April. The pullback came off the back of a 7.3% slide in the week ending 19th April.
The Refinance Index fell by 5% in the week ending 26th April. The slide came off the back of an 11% fall in the week ending 19th April.
The share of refinance mortgages fell from 39.4% to 38.8%, following a decrease from 41.5% to 39.4% in the week prior.
According to the MBA, 30-year fixed rates hit reverse as concerns over global growth, in Germany in particular, offset better than expected economic data out of the U.S. Applications to refinance and purchase a home both declined, while purchasing activity remained slightly above levels from a year ago.
For the week ahead
It’s a quieter week ahead on the economic data front. Key stats due out of the U.S are limited to JOLTs job openings, which are scheduled for release on Tuesday.
While stats through the1st half of the week are on the lighter side, April nonfarm payroll and wage growth figures released last Friday will influence going into the week.
Softer than forecasted wage growth could limit any upside in U.S Treasury yields early on in the week.
From elsewhere, April trade data due out of China on Wednesday will likely be the key risk driver. Weak numbers and expect mortgage rates to take another hit in the week ahead.
This article was originally posted on FX Empire
More From FXEMPIRE:
- E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Strong Upside Momentum into Close
- Natural Gas Price Futures (NG) Technical Analysis – Strengthens Over $2.552, Weakens Under $2.534
- The Crypto Week – Bitcoin Cash ABC and Litecoin Stole the Show
- US Stock Market Overview – Stocks Surge Following Robust Jobs Data
- Gold Price Futures (GC) Technical Analysis – Trend Changes to Up on Trade Through $1290.90
- Weekly Wrap – The Pound Stole the Show at the Expense of the Dollar