US mortgage rates fall further from 3%

Mortgage rates fell further in the week ending 8^e July

After falling 4 basis points from the previous week, fixed 30-year rates fell 8 basis points to 2.90%.

Since 21^st In April, 30-year mortgage rates had risen only once past the 3% mark before the current decline.

Compared to the same period last year, fixed 30-year rates fell 13 basis points.

30-year fixed rates are still down 204 basis points since the last peak in November 2018 at 4.94%.

Economic data of the week

It was a quiet first half of a week on the US economic calendar.

Key stats included the all-important ISM non-manufacturing PMI figures for June and JOLT’s job postings for May.

It was a mixed start for the markets, with the ISM non-manufacturing PMI rising from 64.0 to 60.1.

In contrast, vacancies fell from 9.193 million to 9.209 million in May. However, with the minutes of the midweek FOMC meeting, the statistics had a moderate impact on the markets.

A mixed set of signals from the Fed that spoke of patience but the need to discuss scaling back the asset purchase program weighed on returns.

Market concerns about the pace of the global economic recovery also weighed on riskier assets before a rebound on Friday.

Freddie Mac Pricing

Average weekly rates for new mortgages at 8^e July were cited by Freddie mac to be:

According to Freddie Mac,

• Mortgage rates have fallen in response to falling US Treasury yields.

• While mortgage rates tend to closely track Treasury yields, other factors can also influence, notably labor markets.

• We expect economic growth to gradually drive up interest rates.

• Homebuyers and refinanced borrowers still have the option of taking advantage of 30-year rates, which are expected to continue to hover around 3%.

Mortgage Bankers Association rate

The story continues

For the week ending 2^sd July, the rates have been:

• The 30-year average interest rates set on compliant loan balances declined from 3.20% to 3.15%. Points increased from 0.39 to 0.38 (including origination fees) for LTV loans at 80%.

• The 30-year average fixed mortgage rates guaranteed by the FHA fell from 3.19% to 3.17%. Points increased from 0.34 to 0.32 (including origination fees) for LTV loans at 80%.

• The 30-year average rates for jumbo loan balances fell from 3.23% to 3.20%. Points increased from 0.33 to 0.28 (including origination fees) for LTV loans at 80%.

Weekly figures released by the Mortgage Bankers Association showed that the Composite Market Index, which is a measure of mortgage application volume, fell 1.8% in the week ending 2^sd July. The previous week, the index had fallen 6.9%.

The refinancing index fell 2% and was 8% lower than the same week a year ago. The index had fallen 8% the week before.

In the week ending 2^sd In July, the refinancing share of mortgage activity had fallen from 61.9% to 61.6%. The share had fallen from 62.5% to 61.9% the previous week.

According to the MBA,

• Mortgage demand activity declined for the 2^sd week in a row, reaching the lowest level since the start of 2020.

• Even when mortgage rates fell, demands to buy and refinance fell.

• Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which pointed to further improvement in the labor market.

• As mortgage rates have fallen, many borrowers have already refinanced at even lower rates.

• Refinancing requests have trended lower than 2020 levels over the past 4 months.

For the coming week

It’s another calm first half of a week. After a quiet end to the previous week, inflation figures for June will spark interest on Tuesday and Wednesday.

As concerns about inflation persist, expect a big influence from the numbers.

Outside of the economic calendar, COVID-19 news and discussions from FOMC members will also need to be monitored during the week.

This article originally appeared on FX Empire

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