In the week ending June 30, mortgage rates fall for the first time in four weeks.
30-year fixed rates fell by 11 basis points. Reversing a 3-basis point rise from the previous week, the 30-year fixed ended the week at 5.7%.
Year-on-year, 30-year fixed rates were up by 272 basis points and 76 basis points since November 2018’s previous peak of 4.94%.
Economic Data from the Week
It was a relatively busy week on the US economic calendar. Key stats included core durable goods orders, consumer confidence, and finalized first quarter GDP numbers in focus.
The numbers were negative for riskier assets, supporting the pullback in mortgage rates.
In June, the CB Consumer Confidence Index fell from 103.2 to 98.7, which could translate to a fall in spending to add further pressure on the US economy.
On Wednesday, a downward revision to first quarter GDP numbers added to the bearish mood.
With the stats weighing, Fed Chair Powell commentary failed to soothe the markets.
Powell spoke on Wednesday, reinforcing the commitment to bring inflation to target at any costs.
Freddie Mac Rates
The weekly average rates for new mortgages, as of June 30, 2022, were quoted by Freddie Mac to be:
- 30-year fixed rates fell by 11 basis points to 5.70%. This time last year, rates stood at 2.98%. The average fee rose from 0.8 points to 0.9 points.
- 15-year fixed rates declined by 9 basis points to 4.83% in the week. Rates were up by 257 basis points from 2.26% a year ago. The average fee remained unchanged at 0.9 points.
- 5-year fixed rates increased by 9 basis points to 4.50%. Rates were up by 196 basis points from 2.54% a year ago. The average fee remained unchanged at 0.3 points.
According to Freddie Mac,
- The surge in mortgage rates hit pause, with the markets grappling with the impact of inflation on monetary policy and the fears of a recession.
- Housing sector activity found much-needed support, with house price appreciation normalizing at the end of the quarter.
Mortgage Bankers’ Association Rates
For the week ending June 24, 2022, the rates were:
- Average interest rates for 30-year fixed with conforming loan balances decreased from 5.98% to 5.84%. Points fell from 0.77 to 0.64 (incl. origination fee) for 80% LTV loans.
- Average 30-year fixed mortgage rates backed by FHA remained unchanged at 5.62%. Points declined from 1.18 to 1.15 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances decreased from 5.49% to 5.42%. Points fell from 0.45 to 0.28 (incl. origination fee) for 80% LTV loans.
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, a measure of mortgage loan application volume, increased by 0.7%. The Index rose by 4.2% in the week prior.
The Refinance Index increased by 2% and was 80% lower than the same week one year ago. In the previous week, the Index fell by 3%.
The refinance share of mortgage activity increased from 29.7% to 30.3%. In the previous week, the share decreased from 31.7% to 29.7%.
According to the MBA,
- While mortgage rates continue to see large swings, 30-year fixed rates were still well above rates seen a year ago.
- A fall in mortgage rates led to a modest increase in refinance activity, though refinances remained 80% lower than a year ago.
- Purchase activity has weakened in recent months, with average purchase loan amounts continuing a downward trend since March 2022.
For the week ahead
In a shortened week, factory orders, ISM Non-Manufacturing PMI, and JOLTs job openings are the key stats.
While job openings will draw interest, weakening service sector activity would fuel market fears of a US recession.
On the monetary policy front, the FOMC meeting minutes will also influence US Treasury Yields in the week.
With nonfarm payrolls due out later in the week, we could see risk aversion continue to hit riskier assets, which would support another fall in mortgage rates.