Mortgage rates were on the rise in the week ending 18th July. After a flat week last week, rates rose for just the 3rd time in 13 weeks.
In the week ending 18th July, 30-year fixed rates increased by 6 basis points to 3.81%. In spite of the rise, 30-year rates remained close to the lowest level since late 2016 according to figures released by Freddie Mac.
Compared to this time last year, 30-year fixed rates were down by 71 basis points.
More significantly, 30-year fixed rates are down by 113 basis points since last November’s most recent peak of 4.94%.
Freddie Mac noted that homebuyers continued to take advantage of multi-year low rates despite the latest uptick. Both refinancing and purchase application volumes were on the rise. Freddie Mac also noted that housing demand should provide sufficient momentum for the housing market and economy during the remainder of the year.
Economic Data from the Week
Key stats out of the U.S through the 1st half of the week were on the heavier side.
New York Empire State Manufacturing Index numbers provided direction on Monday, which was positive for yields.
The focus then shifted to U.S retail sales figures on Tuesday that came in better than forecasted, supporting U.S Treasury yields. Industrial production and business inventory numbers released later on in the day failed to influence.
Stats on Wednesday also had a muted impact on U.S Treasury yields in spite of some disappointing stats from the housing sector.
Building permit approvals slid by 6.1% in June, year-on-year, with housing starts falling by 0.9% over the same period.
Outside of the U.S, economic data out of China at the start of the week came in better than expected, easing any concerns over an economic meltdown.
On the monetary policy front, FED Chair Powell reiterated the FED’s willingness to cut rates on Tuesday, though the impact on yields was limited. FED’s forward guidance did support, however, the uptick in consumer spending in June.
Freddie Mac Rates
The weekly average rates for new mortgages as of 18th July were quoted by Freddie Mac to be:
- 30-year fixed rates increased by 6 basis points to 3.81% in the week. Rates were down from 4.52% from a year ago. The average fee rose from 0.5 to 0.6 points.
- 15-year fixed rates rose by 1 basis point to 3.23% in the week. Rates were down from 4.00% from a year ago. The average fee held steady at 0.5 points.
- 5-year fixed rates increased by 2 basis points to 3.48% in the week. Rates were down by 39 basis points from last year’s 3.87%. The average fee held steady at 0.4 points.
Mortgage Bankers’ Association Rates
For the week ending 12th July, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, increased from 3.97% to 4.01%. Points decreased from 0.30 to 0.28 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances increased from 4.04% to 4.12%. Points increased from 0.37 to 0.38 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances increased from 4.03% to 4.07%. Points decreased from 0.27 to 0.21 (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, decreased by 1.1% in the week ending 12th July. The fall followed on from a 2.4% decline in the week ending 5th July.
The Refinance Index increased by 2% in the week ending 12th July, partially reversing a 7% fall in the week ending 5th July.
The share of refinance mortgage activity increased from 48.7% to 50.0%, also partially reversing a fall from 51.0% to 48.7% in the week prior.
According to the MBA, buyer interest at the start of the 3rd quarter continued to outpace year-ago levels. Applications were lower overall in the week, however, following the 4th July holiday.
For the week ahead
It’s a relatively quiet first half of the week ahead.
June existing home and new home sales figures are due out on Tuesday and Wednesday. The stats will likely have a muted impact on yields.
Prelim private sector PMI numbers will have an influence on Wednesday, however, as the markets look ahead to the end of the month FOMC meeting.
Outside of the numbers
Earnings season is in full swing and will likely, not only influence market risk appetite but also sentiment towards next week’s FED.
On the geopolitical front, there’s the outcome of the UK leadership race, Brexit, the U.S – China trade negotiations and Iran to consider…
This article was originally posted on FX Empire
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