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U.S Mortgage Rates Hold Steady as Economic Uncertainty Lingers

Mortgage rates were relatively flat, with 30-year fixed rates rising by just 1 basis point. After holding steady in the week prior, rates rose for just the 4th time in 11-weeks.

In the week ending 9th September, 30-year fixed rates rose by 1 basis point to 2.88%.

30-year mortgage rates have risen just once beyond the 3% mark Since 21st April.

Compared to this time last year, 30-year fixed rates were up by 2 basis points.

30-year fixed rates were still down by 206 basis points since November 2018’s last peak of 4.94%.

Economic Data from the Week

It was a quieter first half of the week, with the U.S markets closed for Labor Day on Monday.

Key stats included JOLT’s job openings from the U.S, which were upbeat following the disappointing NFP numbers from the week prior.

With stats from the U.S on the lighter side, the weaker than expected nonfarm payrolls from the Friday prior pegged rates back in the week, however.

Freddie Mac Rates

The weekly average rates for new mortgages as of 9th September were quoted by Freddie Mac to be:

  • 30-year fixed rates increased by 1 basis point to 2.88% in the week. This time last year, rates had stood at 2.86%. The average fee remained rose from 0.6 to 0.7 points.
  • 15-year fixed increased by 1 basis point 2.19% in the week. Rates were down by 18 basis points from 2.47% a year ago. The average fee remained unchanged at 0.6 points.
  • 5-year fixed rates fell by 1 basis point to 2.42%. Rates were down by 69 points from 3.11% a year ago. The average fee remained unchanged at 0.3 points.

According to Freddie Mac,

  • While the economy continues to grow, it has lost momentum over the last 2-months due to the current wave of the Delta variant.
  • Weaker employment, lower spending, and declining consumer confidence has resulted, pegging back rates.
  • Rates have held steady despite increases in inflation caused by supply and demand imbalances.
  • The net result for housing is that these low and stable rates allow customers more time to find the homes they are looking to purchase.

Mortgage Bankers’ Association Rates

For the week ending 3rd September, the rates were:

  • Average interest rates for 30-year fixed with conforming loan balances remained unchanged at 3.03%. Points decreased from 0.34 to 0.33 (incl. origination fee) for 80% LTV loans.
  • Average 30-year fixed mortgage rates backed by FHA fell from 3.09% to 3.07%. Points rose from 0.25 to 0.30 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances increased from 3.13% to 3.14%. Points rose from 0.26 to 0.30 (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, declined by 1.9% in the week ending 3rd September. In the previous week, the index had decreased by 2.4%.

The Refinance Index decreased by 3% and was 4% lower than the same week a year ago. The Index had fallen by 4% in the previous week.

In the week ending 3rd September, the refinance share of mortgage activity remained unchanged at 66.8%. The share had fallen from 67.3% to 66.8% in the week prior.

According to the MBA,

  • Mortgage application volumes fell last week to its lowest level since mid-July, as mortgage rates remained above 3% for several weeks.
  • Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market.
  • Economic data has seen mixed signals, with slower job growth but a further drop in the unemployment rate in August.
  • We expect that further improvements will lead to a tapering of the FED MBS purchases by the end of the year. This should put some upward pressure on mortgage rates.

For the week ahead

It’s a busier week ahead on the economic data front. U.S inflation figures on Tuesday and industrial production figures on Wednesday will influence.

Another pickup in inflationary pressure would likely bring forward the FED’s timelines on tapering. While employment growth has slowed, a continued pickup in inflationary pressure would need to be curbed. Expect, therefore, further inflationary pressure to nudge mortgage rates northwards.