May 16, 2021

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Mortgage News

Mortgage Rates Rates Avoid a 4th Consecutive Weekly Fall as COVID-19 Pegs Back Yields

Mortgage rates prevented a fourth consecutive weekly increase in the week of the 29thth April. After a decline of 7 basis points compared to the previous week, the 30-year fixed interest rate rose by 1 basis point to 2.98%.

Compared to this time last year, the 30-year fixed interest rate was down 25 basis points.

The 30-year fixed rate had fallen 196 basis points since the last high of 4.94% in November 2018.

In particular, the mortgage rates remained below the predecessor; the 3% mark.

Economic data of the week

The US economic calendar was relatively calm in the first half of the week.

Key statistics included durable goods and core values ​​for durable goods and consumer confidence.

The statistics were positive, which supported the bullish economic outlook.

Major durable goods rose 1.6% to reverse a 0.3% decrease from February, while durable goods rose 0.5%.

More importantly, the CB Consumer Confidence Index rose from 109.0 to 121.7 in April, indicating a continued pickup in consumption.

The Fed was also involved in monetary policy on Wednesday. In line with market expectations, the Fed left its policy unchanged, assuring the markets that their current stance would not change.

Freddie Mac Awards

The weekly average rates for new mortgages as of April were quoted by Freddie Mac be::

  • The 30-year fixed interest rate rose 1 basis point for the week to 2.98%. At this time last year the rate was 3.23%. The average fee was constant at 0.7 points.
  • The 15-year fix rose 2 basis points for the week to 2.31%. Interest rates fell by 46 basis points from 2.77% in the previous year. The average fee increased from 0.6 points to 0.7 points.
  • The five-year fixed rate fell 19 basis points to 2.64%. Rates fell 50 points from 3.14% a year ago. The average fee remained unchanged at 0.3 points.

According to Freddie Mac,

  • The uptrend in US Treasury bond yields halted a month ago due to rising COVID-19 cases around the world.
  • Returns have remained in a tight range as the markets process incoming economic data.
  • The good news is that refinancing at rates below 3% remains attractive to many borrowers who financed before 2020.
  • However, for avid buyers, especially first-time buyers, inventory remains extremely low.
  • The competition for available houses to buy remains high.

Mortgage lender association rates

For the week until 23approx April the Prices were::

  • The 30-year average interest rate set on conforming loan balances decreased from 3.20% to 3.17%. The points for 80% LTV loans fell from 0.36 to 0.30 (including the origination fee).
  • The FHA-backed 30-year average fixed mortgage rate decreased from 3.15% to 3.12%. For 80% LTV loans, the points fell from 0.31 to 0.24 (including origination fee).
  • The 30-year average jumbo loan balance decreased from 3.34% to 3.28%. The points for 80% LTV loans were increased from 0.29 to 0.30 (including origination fee).

The weekly numbers released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of the volume of mortgage loan applications, was down 2.5% for the week ending on the 23rdapprox April. The week before, the index was up 8.6%.

The refinancing index fell by 1.0% and was 18% below the previous year’s value. The index was up 10.0% the week before.

In the week until 23approx In April, the refinancing share of mortgage activity rose from 60.0% to 60.6%. In the previous week the share had risen from 59.2% to 60.0%.

According to the MBA,

  • Mortgage applications fell last week even though mortgage rates fell 3approx consecutive week.
  • The 30-year fixed rate fell 3 basis points to 3.17%, which is still 32 basis points above the low reported in December 2020.
  • Even with a few weeks of lower interest rates, borrowers are likely to have already refinanced. Because of this, activity has decreased in seven of the last eight weeks.
  • The most recent decline in the shopping market can be seen in spite of a consolidating economy and an increasing labor market.
  • Activity is still higher than last year, but accelerated home price growth and low inventory levels have resulted in a decline in purchase requests for four of the last five weeks.

For the coming week

It’s a busier first half of the week on the US economic calendar. The market’s preferred PMIs for the ISM private sector survey are published along with the ADP non-farm employment change figures.

After impressive stats from the US last week, another string of positive numbers could drive returns north.

Much, however, will depend on the COVID-19 vaccination front and whether governments can contain the current global upward trend in new COVID-19 cases.

In terms of monetary policy, Fed chairman Powell is due to speak earlier this week, which will also generate great interest.