Mortgage rates were on the rise once more in the week ending 14th November. 30-year fixed rates rose by 6 basis points to 3.74%. In the week ending 7th November. 30-year fixed rates had fallen by 9 basis points to 3.69%.
In spite of the 6 basis point rise, 30-year rates remained relatively close to levels last seen in early November of 2016, according to figures released by Freddie Mac.
Compared to this time last year, 30-year fixed rates were down by 119 basis points.
30-year fixed rates were also down by 119 basis points since last November’s most recent peak of 4.94%.
Economic Data from the Week
Economic data was on the quieter side in the first half of the week.
Key stats included October inflation figures on Wednesday and wholesale inflation numbers on Thursday.
The numbers were skewed to the negative, with the annual core rate of inflation easing from 2.4% to 2.3% in October. A 0.4% rise in consumer prices, month-on-month, limited the damage on the day, however.
On Thursday, the Core Producer Price Index rose by 0.3% in October, month-on-month, reversing a 0.3% fall in September. The Producer Price Index also rebounded, rising by 0.4% to reverse a 0.3% decline in September.
While the stats had a limited impact, speeches by U.S President Trump and FED Chair Powell and sentiment towards trade did influence.
On Tuesday, President Trump talked of an imminent phase 1 agreement with China, whilst also saying that if China did not agree to his terms, more punitive tariffs would be imposed.
On Wednesday, FED Chair Powell gave testimony to Congress, saying that the FED would likely hold rates steady near-term supported by Committee member optimism over the economy.
Freddie Mac Rates
The weekly average rates for new mortgages as of 14th November were quoted by Freddie Mac to be:
- 30-year fixed rates increased by 6 basis points to 3.75% in the week. Rates were down from 4.94% from a year ago. The average fee rose from 0.5 points to 0.6 points.
- 15-year fixed rates rose by 7 basis points to 3.20% in the week. Rates were down from 4.36% from a year ago. The average fee increased from 0.4 points to 0.5 points.
- 5-year fixed rates increased by 5 basis points to 3.44% in the week. Rates were down by 70 basis points from last year’s 4.14%. The average fee rose from 0.3 points to 0.4 points.
According to Freddie Mac, the upward momentum in the last 2-months come as recession fears abate and sentiment towards the global economic outlook improves.
The shift in sentiment continued to support mortgage purchase applications, which were up by 15% over the same week a year ago.
With markets considering the housing sector considered a barometer for the U.S economy, the stats suggest that the economy remains on solid ground.
Mortgage Bankers’ Association Rates
For the week ending 8th November, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, increased from 3.79% to 3.85%. Points rose from 0.21 to 0.28 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances rose from 3.98% to 4.03%. Points decreased from 0.37 to 0.31 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances increased from 3.97% to 3.98%. Points decreased from 0.24 to 0.22 (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, jumped by 9.6% in the week ending 8th November. In the week ending 1st November, the Market Composite Index had fallen by 0.1%.
The Refinance Index surged by 13% in the week ending 8th November, leaving the index up by 188% from the same week a year ago… The Index had risen by 2% in the week ending 1st November.
The share of refinance mortgage activity increased from 59.5% to 61.9% in the week, following on from a rise from 58.0 to 59.5% in the week prior.
According to the MBA, mortgage applications jumped to their highest level in a month, with both purchase and refinance activity rising. The rise in both came in spite of mortgage rates climbing in the week.
Positive consumer sentiment figures and optimism over the U.S and China forming a phase 1 trade agreement supported the uptick in mortgage rates.
For the week ahead
It’s a relatively quiet first half of the week on the economic data front.
Key stats include November’s Philly FED Manufacturing figures due out on Thursday, alongside the weekly jobless claims numbers.
From the real estate sector, October building permits and housing starts are due out on Monday. The numbers are due out ahead of existing home sales figures due out on Thursday.
We can expect the numbers to have an impact on U.S Treasuries and mortgage rates. Geopolitics will remain the key driver throughout the week, however.
Over the course of the week, the markets will be in search of a phase 1 trade agreement with China.
There’s also impeachment talk and UK politics to consider as Britain edges closer to the Brexit departure lounge.
This article was originally posted on FX Empire
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