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Mortgage Rates Hold Steady for a Second Consecutive Week

Mortgage rates were in flat for a 2nd consecutive week in the week ending 11th February. In late January, mortgage rates had fallen for 2 consecutive weeks. 30-year fixed rates held steady at 2.73%.

Compared to this time last year, 30-year fixed rates were down by 74 basis points.

30-year fixed rates were also down by 221 basis points since November 2018’s last peak of 4.94%.

Economic Data from the Week

Through the 1st half of the week, economic data from the U.S was on the quieter side. Key stats included December’s JOLTs job openings and January inflation figures.

While there was a rise in job openings at the end of the year, inflation softened in January, which was negative for yields.

While the stats were mixed, market sentiment towards the economic outlook to support yields.

Anticipated fiscal stimulus alongside the FED’s assurance of lower for longer continued to fuel the market optimism.

Freddie Mac Rates

The weekly average rates for new mortgages as of 11th February were quoted by Freddie Mac to be:

  • 30-year fixed rates held steady at 2.73% in the week. This time last year, rates had stood at 3.47%. The average fee remained steady at 0.7 points.
  • 15-year fixed rates fell by 2 basis points to 2.19% in the week. Rates were down by 78 basis points from 2.97% a year ago. The average fee remained unchanged at 0.6 points.
  • 5-year fixed rates rose by 1 basis point 3.79%. Rates were down by 49 points from 3.28% a year ago. The average fee fell from 0.3 to 0.2 points.

According to Freddie Mac,

  • While the U.S services sector continues to struggle, the production side of the economy remains strong.
  • New COVID-19 cases are receding, which has supported an uptick in U.S Treasury yields.
  • Treasury yields have yet to impact mortgage rates, however.
  • The residential real estate market remains solid given healthy purchase demand.
  • This is in spite of home price growth fueled by inventory shortages that is plaguing the housing sector.

Mortgage Bankers’ Association Rates

For the week ending 5th February, the rates were:

  • Average interest rates for 30-year fixed to conforming loan balances increased from 2.92% to 2.96%. Points increased from 0.32 to 0.36 (incl. origination fee) for 80% LTV loans.
  • Average 30-year fixed mortgage rates backed by FHA increased from 2.94% to 2.97%. Points rose from 0.29 to 0.36 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.12% to 3.11%. Points decreased from 0.32 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, fell by 4.1% in the week ending 5th February. In the previous week, the index had increased by 8.1%.

The Refinance Index fell by 4.0% and was 46% higher than the same week one year ago. The index had surged by 11% in the week prior.

In the week ending 5th February, the refinance share of mortgage activity fell from 71.4% to 70.20%. In the week prior, the share had risen from 70.7% to 71.4%.

According to the MBA,

  • Mortgage rates have increased in 4 of the 1st six weeks of 2021.
  • Despite some weekly volatility, Treasury rates have been driven higher by expectations of a faster economic growth as the COVID-19 vaccine rollout continues.
  • As a result of an uptick in 30-year fixed rates, the share of refinances fell to the lowest level in 3-months.
  • While purchase activity cooled in early February, purchase activity was still 17% higher than last year.
  • Average loan sizes also continued to rise, reaching another survey high of $402,200.

For the week ahead

It’s a relatively busy first half of the week on the U.S economic calendar. Economic data includes NY Empire State Manufacturing and retail sales figures.

While the stats will influence, market sentiment towards the economic outlook will likely remain the key driver.

That leaves yields and mortgage rates in the hands of Capitol Hill in the week.