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U.S Mortgage Rates Hold Steady for a 3rd Consecutive Week

Mortgage rates hovered for a 3rd consecutive week. A modest decline ensured that 30-year fixed rates continued to sit above the 3% mark as the year end approaches.

In the week ending 9th December, 30-year fixed rates slipped by 1 basis point to 3.10%.

Compared to this time last year, 30-year fixed rates were up by 39 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 quiet 1st half of the week. Economic data included 3rd quarter nonfarm productivity and unit labor cost and trade data on Tuesday ahead of JOLT’s job openings on Wednesday.

Wednesday’s JOLT’s job openings rose from 10.602m to 11.033m in October, which was the key stat early in the week.

While the stats were skewed to the positive, with the U.S trade deficit narrowing and unit labor costs in the rise, market sentiment towards the Omicron strain pegged rates back in the week.

Freddie Mac Rates

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

  • 30-year fixed rates slipped by 1 basis point to 3.10% in the week. This time last year, rates had stood at 2.71%. The average fee rose from 0.6 points to 0.7 points.
  • 15-year fixed decreased by 1 basis point to 2.38% in the week. Rates were up by 12 basis points from 2.26% a year ago. The average fee increased from 0.6 points to 0.7 points.
  • 5-year fixed rates fell by 4 basis points to 2.45%. Rates were down by 34 points from 2.79% a year ago. The average fee remained unchanged at 0.3 points.

According to Freddie Mac,

  • Mortgage rates have moved sideways over the last several weeks, fluctuating within a narrow range.
  • Going forward, the path that rates take will be directly impacted by more information about the Omicron strain and the overall trajectory of the pandemic.
  • In the meantime, rates remain low and stable, even as the nation faces declining housing affordability and low inventory.

Mortgage Bankers’ Association Rates

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

  • Average interest rates for 30-year fixed with conforming loan balances decreased from 3.31% to 3.30%. Points decreased from 0.43 to 0.39 (incl. origination fee) for 80% LTV loans.
  • Average 30-year fixed mortgage rates backed by FHA fell from 3.42% to 3.35%. Points decreased from 0.35 to 0.32 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances increased from 3.27% to 3.33%. Points fell from 0.35 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, increased by 2.0% in the week ending 3rd December. The index had decreased by 7.2% in the week prior. The Refinance Index increased by 9% and was 37% lower than the same week one year ago. In the previous week, the index had tumbled by 15%.

The refinance share of mortgage activity increased from 59.4% to 63.9%. The share had decreased from 63.1% to 59.4% in the previous week.

According to the MBA,

  • Mortgage rates fell for the 1st time in a month, supporting a pickup in refinancing.
  • The purchase market was slower last week with applications falling after 4 consecutive increases.
  • Activity is still close to its highest level since Mar-2021, a positive sign as the year comes to an end.
  • Purchase activity continues to be constrained by a lack of inventory, combined with rapid rates of home-appreciation and mortgage rates higher than in 2020.

For the week ahead

It’s a busier first half of the week on the U.S economic calendar.

On Tuesday, wholesale inflation will be in focus ahead of retail sales and private sector PMIs on Wednesday.

While the stats will influence, however, the FED policy decision and economic projections late on Wednesday will be key, however.

Away from the economic calendar, Omicron news updates will continue to influence.