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Mortgage Rates Fall for a 3rd Consecutive Week and Return to sub-3% Levels

Mortgage rates fell for the third consecutive week in the week ending 22nd  April. Following a 9-basis points decline from the week prior, 30-year fixed rates fell by 7 basis points to 2.97%.

Compared to this time last year, 30-year fixed rates were down by 36 basis points.

30-year fixed rates were still down by 197 basis points since November 2018’s last peak of 4.94%.

Notably, mortgage rates fell back below the 3% mark.

Economic Data from the Week

It was quiet first half of the week on the U.S economic calendar.

There were no major stats from the U.S to influence U.S Treasury yields and mortgage rates in the week.

While there were no stats, a rise in new COVID-19 cases globally tested support for riskier assets in the week.

Freddie Mac Rates

The weekly average rates for new mortgages as of 22nd April were quoted by Freddie Mac to be:

  • 30-year fixed rates fell by 7 basis point to 2.97% in the week. This time last year, rates had stood at 3.33%. The average fee held steady at 0.7 points.
  • 15-year fixed declined by 6 basis points to 2.29% in the week. Rates were down by 57 basis points from 2.86% a year ago. The average fee decreased from 0.7 points to 0.6 points.
  • 5-year fixed rates rose by 3 basis points to 2.83%. Rates were down by 45 points from 3.28% a year ago. The average fee fell from 0.4 points to 0.3 points.

According to Freddie Mac,

  • The fall in mortgage rates is good news for homeowners who are still looking to take advantage of the very low rate environment,
  • Freddie Mac research suggests that lower income and minority homeowners have been less likely to engage in the refinance market.
  • Low and declining mortgage rates provide these homeowners the opportunity to reduce their monthly payment and improve their financial position.

Mortgage Bankers’ Association Rates

For the week ending 16th April, the rates were:

  • Average interest rates for 30-year fixed to conforming loan balances decreased from 3.27% to 3.20%. Points increased from 0.33 to 0.36 (incl. origination fee) for 80% LTV loans.
  • Average 30-year fixed mortgage rates backed by FHA decreased from 3.24% to 3.15%. Points fell from 0.40 to 0.31 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.35% to 3.34%. Points decreased from 0.34 to 0.29 (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, increased by 8.6% in the week ending 16th April. In the week prior, the index had fallen by 3.7%.

The Refinance Index jumped by 10.0% and was 23% lower than the same week a year ago. The index had fallen by 5.0% in the week prior.

In the week ending 16th April, the refinance share of mortgage activity increased from 59.2% to 60.0%. In the previous week, the share had decreased from 60.3% to 59.2%.

According to the MBA,

  • Mortgage rates dropped to their lowest levels in around 2-months, driving a jump in refinance activity.
  • In the 6-weeks, prior, refinance activity had been in decline.
  • Borrowers acted on the decrease in rates for most loan types.
  • The spring housing market also saw a boost from lower rates. Purchase applications were on the rise in response.
  • MBA expects the purchase market to remain strong, with recovering job market and supportive demographics fueling housing demand near-term.

For the week ahead

It’s a quiet first half of the week on the U.S economic calendar. Core durable goods and durable goods orders are in focus along with consumer confidence figures.

Expect core durable goods and consumer confidence to have the greatest impact on yields.

Mid-week, the FED delivers its April monetary policy decision. With the markets expecting the FED to stand pat on policy, the rate statement will be the key driver.