Mortgage rates fell by 3 basis points to 4.28% in the week ending 21st March. The latest reversal saw mortgage rates continue to fall to the lowest level since the end of January last year. The figures were released by Freddie Mac.
Following the weekly decline, 30-year fixed rates stood 17 basis points below levels from 12-months ago.
Since the most recent peak at mid-November of last year, 30-year fixed rates have fallen by 66 basis points. Of greater significance is that fact the mortgage rates continued the downward trend for the current year.
Economic Data from the Week
Economic data released ahead of last week’s mortgage rates release were on the lighter side.
U.S factory orders were the only material data to be considered, which were released on Monday. While orders rose by 0.1%, the figures came up short of a forecasted 0.3% increase.
Outside of the numbers, the FED’s March monetary policy meeting weighed on U.S Treasury yields on Wednesday. The FED projected a hold on interest rates through the current year, leading to a rise in demand for U.S Treasuries.
Economic growth concerns and Brexit added to the allure of U.S Treasuries, in spite of a rebound in manufacturing in Philly. The Philly FED Manufacturing Index rose from -4.1 to 13.7 in March.
Eurozone and U.S private sector PMI numbers released on Friday led to a yield curve inversion between the 10-year and 3-months. Dire numbers out of Germany and weaker growth in the U.S provided further evidence of a global economic slowdown.
Freddie Mac Rates
The weekly average rates for new mortgages as of 21st March were quoted by Freddie Mac to be:
- 30-year fixed rates fell by 3 basis points to 4.28% in the week. Rates were down from 4.45% from a year ago. The average fee remained unchanged at 0.4 points.
- 15-year fixed rates slipped by 5 basis points to 3.71% in the week. Rates were down from 3.91% from a year ago. The average fee held steady at 0.4 points.
- 5-year fixed rates remained unchanged at 3.84% in the week. Rates increased by 16 basis points from last year’s 3.68%. The average fee held steady at 0.3 points.
Mortgage Bankers’ Association Rates
For the week ending 15th March, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, decreased from 4.61% to 4.59%. Points increased from 0.47 to 0.50 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances decreased from 4.64% to 4.55%. Points decreased from 0.47 to 0.42 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances decreased from 4.45% to 4.37%. Points decreased from 0.34 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, rose by 1.6% in the week ending 15th March. The increase follows on from a 2.3% increase from the previous week.
The Refinance Index rose by 4% in the week ending 15th March. The increase followed on from a 0.2% fall from the previous week.
The share of refinance mortgages increased from 38.6% to 39.2%, following a fall from 40.0% to 38.6% in the week prior.
For the week ahead
Economic data due out of the U.S is on the lighter in the week ahead, but will certainly provide further direction.
On the data front, March consumer confidence figures due out on Tuesday will be the key driver through the 1st half of the week.
While we can expect the markets to largely brush aside trade data due out on Wednesday, some apprehension ahead of 4th quarter GDP numbers due out on Thursday will also be a factor.
Following the yield curve inversion on Friday, any upbeat consumer confidence figures may not be enough to prop up mortgage rates through the week, however.
On the housing front, February building permits, housing starts, and pending home sales, together with January house price figures will provide some further guidance on what lies ahead for the sector. Last week’s 11.8% jump in existing home sales came off the back of the continued slide in mortgage rates. Growing concerns over the economic outlook could peg back permits and housing starts down the track. For the week ahead will likely be positive, however.
Outside of the numbers, trade talks between the U.S and China and Brexit will provide further direction for U.S Treasury yields. Parliament’s vote on British Prime Minister Theresa May’s deal could drive Britain out of the EU without a deal.
On the monetary policy front, FOMC members speaking through the week could add further pressure on yields. A number of FOMC members speaking late last week talked of the FED having possibly gone too far in December. No members have talked of a rate cut yet, however…
This article was originally posted on FX Empire
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