Mortgage rates fell for the first time in 9-weeks in the week ending 8th April. Reversing a 1-basis point decline from the week prior, 30-year fixed rates fell by 5 basis points to 3.13%.
Compared to this time last year, 30-year fixed rates were down by 20 basis points.
30-year fixed rates were still down by 181 basis points since November 2018’s last peak of 4.94%.
Notably, however, it was just the sixth plus 3% week since July of last year.
Economic Data from the Week
It was busier first half of the week on the U.S economic calendar.
On the economic data front, service sector PMI, factory orders, and trade data were in focus.
It was a mixed bag on the economic data front, however.
While service sector data continued to impress, factory orders and trade data for February disappointed in the week.
Ultimately, however, it was the FED that pinned back U.S Treasury yields, supporting a pullback in mortgage rates.
The FOMC meeting minutes late on Wednesday reflected the FED’s commitment to leave policy unchanged for the foreseeable future.
This was in line with FED Chair Powell’s most recent testimony to lawmakers.
Freddie Mac Rates
The weekly average rates for new mortgages as of 8th April were quoted by Freddie Mac to be:
- 30-year fixed rates fell by 5 basis point to 3.13% 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 3 basis points to 2.42% in the week. Rates were down by 35 basis points from 2.77% a year ago. The average fee held steady at 0.6 points.
- 5-year fixed rates increased by 8 basis points to 2.92%. Rates were down by 48 points from 3.40% a year ago. The average fee fell from 0.3 points to 0.1 point.
According to Freddie Mac,
- Mortgage rates fell for the first time in 7-weeks as a result of a modest decline in U.S Treasury yields.
- As the economy recovers, there should be a strong rebound in the labor market.
- Combined, these positive signals will continue to bolster purchase demand.
- The drop in rates creates yet another opportunity for those who have yet to refinance.
Mortgage Bankers’ Association Rates
For the week ending 2nd April, the rates were:
- Average interest rates for 30-year fixed to conforming loan balances increased from 3.33% to 3.36%. Points increased from 0.39 to 0.43 (incl. origination fee) for 80% LTV loans.
- Average 30-year fixed mortgage rates backed by FHA increased from 3.29% to 3.36%. Points rose from 0.34 to 0.36 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances increased from 3.34% to 3.41%. Points increased from 0.31 to 0.41 (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, slid by 5.1% in the week ending 2nd April. In the previous week, the index had fallen by 2.2%.
The Refinance Index declined by 5.0% and was 20% lower than the same week a year ago. The index had fallen by 3% in the week prior.
In the week ending 2nd April, the refinance share of mortgage activity decreased from 60.6% to 60.3%. In the previous week, the share had declined from 60.9% to 60.6%.
According to the MBA,
- Mortgage rates resumed their upward trend last week, with the 30-year fixed returning to the highest level since last June.
- The rise contributed to a slowdown in applications for both purchases and refinances.
- Improving labor market conditions, driven by a rapidly recovering economy, is generating sizeable home buying demand.
- In recent weeks, however, quicker home-price growth and extremely low inventory has constrained activity.
- Refinance applications fell for a 5th consecutive week, with refinance demand down by more than 30% over the past 10-weeks.
For the week ahead
It’s a quiet first half of the week on the U.S economic calendar. Key stats are limited to March inflation figures.
While the FED continues to assure the markets of an extended hold on monetary policy, a marked pickup in inflationary pressures would likely nudge yields northwards.
With economic data on the lighter side, news from Capitol Hill and any FOMC member chatter will also influence in the week.