Mortgage rates held steady after having risen for the first time in 3-weeks in the week prior.
As a result of the hold, 30-year fixed rates continued to sit above the 3% mark going into the Thanksgiving holidays. In the week ending 25th November, 30-year fixed rates remained unchanged at 3.10%.
Compared to this time last year, 30-year fixed rates were up by 38 basis points.
30-year fixed rates were still down by 184 basis points, however, since November 2018’s last peak of 4.94%.
Economic Data from the Week
It was a busy 1st half of the week on the economic data front.
Early in the week, prelim private sector PMIs were in focus, with the numbers skewed to the negative.
While the manufacturing PMI rose from 58.4 to 59.1, the all-important services PMI declined from 58.7 to 57.0. As a result, the Composite PMI fell from 58.7 to 57.0.
Ahead of the Thanksgiving holidays, a particularly busy set of numbers also drew plenty of interest.
Personal spending rose by 1.3%, with jobless claims falling from 270k to 199k in the week ending 19th November.
Core durable goods orders were also positive, rising by 0.5% in October, with inflationary pressures picking up once more.
The FED’s preferred core PCE price index rose by 4.1%, year-on-year in October. In September, the index had risen by 3.7%.
GDP numbers for the 3rd quarter fell short of estimates, however. In the 3rd quarter, the economy expanded by 2.1%, falling short of a forecasted 2.2%. The economy had expanded by 6.7% in the previous quarter.
On Wednesday, the FOMC meeting minutes were also in focus. With FED Chair Powell’s reappointment and minutes revealing members acknowledging that inflationary pressures are unlikely to ease near-term, market sentiment towards FED policy also turned more hawkish.
Freddie Mac Rates
The weekly average rates for new mortgages as of 25th November were quoted by Freddie Mac to be:
- 30-year fixed rates held steady at 3.10% in the week. This time last year, rates had stood at 2.72%. The average fee remained unchanged at 0.7 points.
- 15-year fixed increased by 3 basis points to 2.42% in the week. Rates were up by 14 basis points from 2.28% a year ago. The average fee increased from 0.6 points to 0.7 points.
- 5-year fixed rates slipped by 2 basis point to 2.47%. Rates were down by 69 points from 3.16% a year ago. The average fee remained unchanged at 0.3 points.
According to Freddie Mac,
- Despite the noise around the economy, inflation, monetary policy, mortgage rate volatility has been low.
- For most of 2021, mortgage rates have stayed within half a percentage point, which is a smaller range than in past years.
Mortgage Bankers’ Association Rates
For the week ending 19th November, the rates were:
- Average interest rates for 30-year fixed with conforming loan balances increased from 3.20% to 3.24%. Points decreased from 0.43 to 0.36 (incl. origination fee) for 80% LTV loans.
- Average 30-year fixed mortgage rates backed by FHA rose from 3.23% to 3.27%. Points decreased from 0.41 to 0.34 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances increased from 3.26% to 3.28%. Points fell from 0.39 to 0.26 (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 1.8% in the week ending 19th November. In the previous week, the index had fallen by 2.8%.
The Refinance Index increased by 0.4% and was 34% lower than the same week one year ago. In the week prior, the index had fallen by 5%.
The refinance share of mortgage activity increased from 62.9% to 63.1%. In the previous week, the share had fallen from 63.5% to 62.9%.
According to the MBA,
- The financial markets continue to discern the FED’s policy path in the coming months in light of the current high growth, high inflation environment.
- Despite a fair amount of rate volatility in the last week, mortgage rates were higher.
- Refinance applications also increased, however, in spite of the pickup in rates.
- Borrowers continue to lock in mortgages in anticipation of higher rates in the future.
- Refinance applications were still more than 30% below a year ago, when the 30-year fixed rate was 32 basis points lower.
- Purchase activity increased for the 3rd straight week, as housing demand remains robust.
For the week ahead
It’s a busy first half of the week on the U.S economic calendar.
On Tuesday, consumer confidence will be in focus ahead of ADP nonfarm and ISM Manufacturing PMI figures on Wednesday.
FED Chair Powell testimony will also garner plenty of interest in the week.
While the data set and Powell will influence Treasury yields in the week, COVID-19 news updates will likely be the key driver.
A slide in mortgage rates could be on the cards should the latest strain of COVID-19 prove to be vaccine resilient.