Mortgage rates continued to rise in the week ending 25th April. 30-year fixed rates rose by 3 basis points following on from a 5 basis point rise from the previous week. The 3 basis point rise took 30-year rates to 4.20% according to figures released by Freddie Mac.
Following the weekly uptick, 30-year fixed rates stood 38 basis points below levels from 12-months ago.
More significantly, 30-year fixed rates remain 74 basis points below last November’s high 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 lighter side. Key stats were limited to March existing home sales and new home sales figures.
While existing home sales slumped by 4.9%, new home sales jumped by 4.5%, painting a mixed picture of the real estate market. On the one hand, mortgage rates are well below last November’s high. On the other hand, the recent uptrend may well have priced out some of those looking to enter the market.
While the stats provided little direction, general sentiment towards the U.S economy supported an uptick in Treasury yields. All of this was before Friday’s 1st estimate GDP numbers.
Corporate earnings added to the allure of riskier assets, with the S&P500 and NASDAQ closing out the week in positive territory.
There were no major geopolitical events to rock the boat, which was certainly a negative for those looking to refinance.
Freddie Mac Rates
The weekly average rates for new mortgages as of 25th April were quoted by Freddie Mac to be:
- 30-year fixed rates rose 3 basis points to 4.20% in the week. Rates were down from 4.58% from a year ago. The average fee held steady at 0.5 points.
- 15-year fixed rates rose by 2 basis points to 3.64% in the week. Rates were down from 4.02% from a year ago. The average fee held steady at 0.5 points.
- 5-year fixed rates decreased by 1 basis points to 3.77% in the week. Rates increased by 3 basis points from last year’s 3.74%. The average fee increased from 0.3 points to 0.4 points.
According to Freddie Mac, in spite of a 4th consecutive weekly rise in mortgage rates, new home sales continue to rise. Improved affordability and a lagged effect of lower rates on demand are expected to support the sector in the months ahead.
Mortgage Bankers’ Association Rates
For the week ending 19th April, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, increased from 4.43% to 4.49%. Points increased from 0.56 to 0.57 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances increased from 4.44% to 4.46%. Points increased from 0.42 to 0.44 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances increased from 4.33% to 4.35%. Points increased from 0.23 to 0.25 (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 7.3% in the week ending 19th April. The pullback came off the back of a 3.5% fall in the week ending 12th April.
The Refinance Index fell by 11% in the week ending 19th April. The slide came off the back of an 8% fall in the week ending 12th April.
The share of refinance mortgages fell from 41.5% to 39.4%, following a decrease from 44.1% to 41.5% in the week prior.
According to the MBA, mortgage rates are up by 10 basis points over the last few weeks to hit the highest level in a month. Refinance applications continue to be the most sensitive to mortgage rates. Purchase activity also slipped, whilst sitting up by almost 3% on last year.
While labor market conditions remain supportive of the sector, rising rates could begin to price out prospective buyers on the lower end of the property ladder.
For the week ahead
It’s a big week ahead. Following some disappointing numbers embedded within the 1st quarter GDP figure, the focus will shift to Monday’s stats.
The FED’s preferred Core PCE Price Index figures are due out on Monday along with personal spending. Following the slide in consumption figures in the 1st quarter, according to the latest GDP report, personal spending will influence.
Ultimately, it’s going to boil down to inflation. Market consensus continues to point to a FED rate cut later in the year. Any uptick in inflationary pressures and expect a marked response.
On Tuesday, the focus will be on the April consumer confidence index that is released ahead of ADP nonfarm employment change and ISM manufacturing PMI numbers on Wednesday.
Wrapping things up for the first half of the week will be the FOMC monetary policy decision. Will the FED be hawkish or dovish?
Mortgage rates will be reactive in the week ahead…
This article was originally posted on FX Empire
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