U.S Mortgage Rates Hit a New Record Low as new COVID-19 Cases Spike

Mortgage rates fell to an all-time record low in the week ending 2nd July. The weekly decline came off the back of a hold in the previous week.

30-Year fixed rates fell by 6 basis points to an all-time low 3.07%. In the previous week, 30-year fixed rates had held steady at 3.13%.

Compared to this time last year, 30-year fixed rates were down by 68 basis points.

30-year fixed rates were also down by 187 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the busier side through the 1st half of the week.

Key stats included consumer confidence, labor market, and private sector PMI figures for June.

Both the ADP and official government figures reported a sizeable jump in nonfarm payrolls in June. The official government figures revealed a record 4.8m increase in nonfarm payrolls, following 2.699m in May.

As a result of the jump in nonfarm payrolls, the U.S unemployment rate fell from 13.3% to 11.1%.

Consumer confidence was also on the rise, with the CB Consumer Confidence Index up from 85.9 to 98.1.

From the private sector, the numbers were also positive. The Chicago PMI rose from 32.1 to 42.1, with the IMS Manufacturing PMI increasing from 43.1 to 52.6.

The only negative from the week was another 1.427m rise in the weekly jobless claims.

While the stats were skewed to the positive, a continued rise in new COVID-19 cases raised more red flags. In recent weeks, a number of U.S states have hit pause on reopening. This could ultimately slow the pace of hiring and economic recovery.

Freddie Mac Rates

The weekly average rates for new mortgages as of 2nd July were quoted by Freddie Mac to be:

  • 30-year fixed rates fell by 6 basis points to 3.07% in the week. Rates were down from 3.75% from a year ago. The average fee also remained unchanged at 0.8 points.
  • 15-year fixed decreased by 3 basis points to 2.56% in the week. Rates were down from 3.18% compared with a year ago. The average fee remained unchanged at 0.8 points.
  • 5-year fixed rates slid by 8 basis points to 3.00% in the week. Rates were down by 45 points from last year’s 3.45%. The average fee decreased from 0.5 points to 0.3 points.

According to Freddie Mac:

  • Mortgage rates continued to move downwards, raising the possibility of sub-3% later in the year.
  • Economic data from the week suggested that economic activity has paused in the last couple of weeks.
  • This was reportedly reflected in consumer spending and purchase activity.

Mortgage Bankers’ Association Rates

For the week ending 26th June, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, increased from 3.35 to 3.43%. Points increased from 0.22 to 0.36 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances declined from 3.30% to 3.29%. Points rose from 0.32 to 0.36 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.62% to 3.59. Points increased from 0.29 to 0.31 (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 1.8% in the week ending 26th June. In the week prior, the Index had fallen by 8.7%.

The Refinance Index decreased by 2% and was up by 74% from the same week a year ago. The Index had slid by 12% in the previous week.

The refinance share of mortgage activity fell from 61.3% to 61.2% of total applications in the week ending 26th June. In the week prior, the share had decreased from 63.2% to 61.3% of total applications.

According to the MBA:

  • Mortgage applications fell last week despite mortgage rates hitting another record low.
  • Investors contemplated the risks of the recent resurgence of COVID-19 cases to the labor market and economy.
  • Following 2-months of strong growth, purchase applications declined for a 2nd consecutive week.
  • The decline is potentially a signal that pent-up demand is beginning to wane, with low housing supply limiting buyer options.
  • Tighter inventories look to be leading to fast price growth, reflected by a record-high increase in the average purchase application loan size.

For the week ahead

It’s another relatively quiet 1st half of the week for the Greenback.

Key stats from the U.S include the market’s preferred ISM Non-Manufacturing PMI for June and the weekly jobless claims.

Expect both sets of figures to garner plenty of attention, with May’s JOLTs job openings also likely to draw attention.

Outside of the numbers, however, COVID-19 and geopolitics will continue to influence market risk sentiment.

The markets will be looking for further progress towards a COVID-19 vaccine and for Trump to hold back on tariffs… There’s also the rising tension between the U.S and China to consider.

U.S Mortgage Rates Stay Flat as Geopolitics and COVID-19 Overshadow the Stats

Mortgage rates were flat in the week ending 25th June, following the previous week’s 1st decline in 3 weeks.

30-Year fixed rates remained unchanged at an all-time low 3.13% following an 8 basis points fall in the week prior.

Compared to this time last year, 30-year fixed rates were down by 60 basis points.

30-year fixed rates were down by 181 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the busier side through the 1st half of the week.

Key stats included prelim June private sector PMI figures, May’s durable goods and core durable goods orders, and the weekly jobless claims figures.

While durable goods and core durable goods orders bounced back in May, the weekly jobless claims disappointed.

In the week ending 19th June, initial claims jumped by 1.48m following a 1.508m increase in the week prior.

The figures suggested that a recovery in the labor market would likely be lower than anticipated.

Early in the week, June’s prelim private sector PMIs had given riskier assets a boost. The manufacturing PMI rose from 39.8 to 49.6, with the services PMI up from 37.5 to 46.7.

Stats skewed to the positive was not enough to give mortgage rates a boost, however.

Risk aversion in the week, stemming from a spike in new COVID-19 cases contributed to the hold on mortgage rates. There was also a threat from the U.S of tariffs on EU goods, with particular focus on France, Germany, Spain, and even the recently departed UK…

Freddie Mac Rates

The weekly average rates for new mortgages as of 25th June were quoted by Freddie Mac to be:

  • 30-year fixed rates remained unchanged at 3.13% in the week. Rates were down from 3.73% from a year ago. The average fee also remained unchanged at 0.8 points.
  • 15-year fixed increased by 1 basis point to 2.59% in the week. Rates were down from 3.16% compared with a year ago. The average fee remained unchanged at 0.8 points.
  • 5-year fixed rates slipped by 1 basis point to 3.08% in the week. Rates were down by 31 points from last year’s 3.39%. The average fee increased from 0.4 points to 0.5 points.

According to Freddie Mac:

  • It took more than 10-years for purchase demand to recover from pre-global financial crisis levels. In the COVID-19 crisis, it took less than 10-weeks.
  • The rebound in purchase demand partly reflects deferred sales as well as continued interest from prospective buyers looking to take advantage of the low mortgage rate environment.

Mortgage Bankers’ Association Rates

For the week ending 19th June, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, increased from 3.33 to 3.35%. Points decreased from 0.23 to 0.22 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances remained unchanged at 3.30%. Points rose from 0.29 to 0.32 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.67% to 3.62. Points increased from 0.28 to 0.29 (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, fell by 8.7% in the week ending 19th June. In the week prior, the Index had risen by 8.0%.

The Refinance Index slid by 12% from the previous week and was up by 76% from the same week one year ago. In the previous week, the Refinance Index had risen by 10%.

The refinance share of mortgage activity decreased from 63.2% to 61.3% of total applications in the week ending 19th June. In the week prior, the share had increased from 61.3% to 63.2% of total applications.

According to the MBA:

  • Mortgage applications fell by 9%, with both refinance and purchase activity declining despite 30-year fixed rates holding at 3.30%.
  • Refinance applications fell to their lowest level in 3-weeks.
  • In spite of the decline, the MBA still expects refinance originations to increase to its highest level since 2012.
  • The MBA also noted that the purchase market was strong, even with high unemployment and economic uncertainty.
  • Activity has climbed for five straight weeks to above year-ago levels.
  • The MBA noted, however, that supply may pin back growth in the months ahead.

For the week ahead

It’s another relatively busy 1st half of the week for the Greenback.

Key stats from the U.S include consumer confidence, ADP nonfarm employment change, and ISM Manufacturing PMI numbers.

In a shortened week, June’s nonfarm payrolls, unemployment rate, and the weekly jobless claims are due out on Thursday.

While we can expect the stats to influence market risk sentiment and yields, COVID-19 and geopolitics will likely be the key drivers.

After last week’s news of a number of U.S states hitting pause on reopening, a continuing trend would pin mortgage rates back further.

With the U.S President looking to distract voters, we can expect plenty of chatter from Trump.

Will Trump deliver on the threat of tariffs for the EU and walk away from the U.S – China trade agreement? The latter may be less likely but certainly not unfeasible…

U.S Mortgage Rates Hit a New Record Low. Can COVID-19 Deliver sub-3%?

Mortgage rates saw their 1st decline in 3 weeks in the week ending 18th June.

30-Year fixed rates decreased by 8 basis points to a new all-time low 3.13%. In the previous week, 30-year fixed rates had risen by 3 basis points to 3.21%.

Compared to this time last year, 30-year fixed rates were down by 71 basis points.

30-year fixed rates were also down by 181 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the busier side through the 1st half of the week.

Key stats included May retail sales figures, June manufacturing numbers out of NY State and Philly, and the weekly jobless claims.

On the positive front was a pickup in manufacturing sector activity in June and a rebound in retail sales in May.

For the markets, another 1.508m jump in jobless claims in the week ending 12th June was negative, however.

Economic data ultimately had a muted impact as did FED Chair Powell’s testimony and FED policy support.

News of fresh COVID-19 spikes across a number of U.S states newly reopened raised concerns over a 2nd wave. A jump in new cases would bring into doubt the reopening of the U.S and the economic recovery.

On the monetary policy front, the FED’s decision to purchase up to $250bn worth of individual corporate bonds was also an alarm bell.

The decision to store up corporate America was yet more evidence of the FED’s concerns over what lies ahead.

Freddie Mac Rates

The weekly average rates for new mortgages as of 18th June were quoted by Freddie Mac to be:

  • 30-year fixed rates fell by 8 basis points to 3.13% in the week. Rates were down from 3.84% from a year ago. The average fee decreased from 0.9 to 0.8 points.
  • 15-year fixed declined by 4 basis points to 2.58% in the week. Rates were down from 3.25% compared with a year ago. The average fee remained unchanged at 0.8 points.
  • 5-year fixed rates slipped by 1 basis point to 3.09% in the week. Rates were down by 39 points from last year’s 3.48%. The average fee remained unchanged at 0.4 points.

According to Freddie Mac:

  • In contrast to the uneven economic rebound, the housing market was one segment that exhibited strength.
  • Purchase demand activity is up over 20%, year-on-year, which is the largest rise since Jan-09.
  • Demand came off the back of another record low in mortgage rates, as inflationary pressures softened further.
  • Freddie Mac does think, however, that inventories will become an issue down the road. Inventories were at near to record lows as the pandemic hit U.S soil.

Mortgage Bankers’ Association Rates

For the week ending 12th June, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.38 to 3.33%. Points decreased from 0.24 to 0.23 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances decreased from 3.87% to 3.30%. Points fell from 0.30 to 0.29 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.70% to 3.67. Points increased from 0.26 to 0.28 (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, rose by 8.0% in the week ending 12th June. In the week prior, the index had increased by 9.3%.

The Refinance Index increased by 10% in the week ending 12th June and was 106% higher than in the same week a year ago. In the previous week, the Refinance Index had risen by 11%.

The refinance share of mortgage activity increased from 61.3% to 63.2% of total applications in the week. In the week prior, the share had increased from 59.5% to 61.3% of total applications.

According to the MBA:

  • Purchase applications increased to the highest level in over 11-years and rose for the 9th consecutive week.
  • The housing market continues to experience the release of unrealized pent-up demand from earlier in the spring.
  • An uptick in consumer confidence contributed to the uptick in demand.
  • Demand for refinancing continued to recover as households looked to gain savings on monthly mortgage payments.

For the week ahead

It’s another relatively busy 1st half of the week for the Greenback.

Key stats from the U.S include prelim June private sector PMIs, May’s durable goods orders, and the weekly jobless claims.

While the stats will have an impact on U.S Treasury yields and mortgage rates, COVID-19 news and Trump could have greater influence.

We have seen the U.S president come under greater scrutiny as a result of the pandemic. The premature reopening of the U.S in a bid to deliver an early economic recovery may be backfiring and there’s no fake news. Trump had talked down a pandemic when the U.S death toll was at sub-100,000.

Expect COVID-19 updates and chatter from Capitol Hill to remain the key driver. The Republicans will be looking to distract voters, which tends to spell trouble…

U.S Mortgage Rates Hold Steady as Demand Continues to Rise

Mortgage rates increased for a 2nd consecutive week in the week ending 11th June, marking a 6th weekly gain in 12-weeks.

30-Year fixed rates increased by 3 basis points to 3.21%. In the previous week, 30-year fixed rates had also risen by 3 basis points to 3.18%.

Compared to this time last year, 30-year fixed rates were down by 61 basis points.

30-year fixed rates were also down by 173 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the lighter side through the 1st half of the week.

Key stats included April’s JOLTs job openings, May inflation figures, and the weekly jobless claims numbers.

Following the better than expected nonfarm payroll numbers from the previous week, however, the stats took a back seat in the week.

Dire economic projections from the World Bank and OPEC did weigh on risk appetite in the early part of the week.

On Wednesday, it was the FOMC monetary policy decision, economic projections and FED Chair press conference, however, that garnered the greatest interest.

FED Chair Powell poured cold water on hopes of a speedier economic recovery, leading to a fall in Treasury yields.

In spite of a marked fall in yields, mortgage rates held steady, with the May labor market numbers from the previous Friday providing support.

Freddie Mac Rates

The weekly average rates for new mortgages as of 11th June were quoted by Freddie Mac to be:

  • 30-year fixed rates rose by 3 basis points to 3.21% in the week. Rates were down from 3.82% from a year ago. The average fee increased from 0.7 to 0.9 points.
  • 15-year fixed remained unchanged at 2.62% in the week. Rates were down from 3.26% compared with a year ago. The average fee increased from 0.7 to 0.8 points.
  • 5-year fixed rates held steady at 3.10% in the week. Rates were down by 41 points from last year’s 3.51%. The average fee remained unchanged at 0.4 points.

According to Freddie Mac, the rebound in homebuyer demand continued in the week, supported by mortgage rate levels. This turnaround in demand, particularly by those who have higher incomes than the typical household, also reflects deferred sales from spring.

Mortgage Bankers’ Association Rates

For the week ending 5th June, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.46 to 3.38%. Points increased from 0.23 to 0.24 (incl. origination fee) for 80% LTV loans.

 

  • Average interest rates for 30-year fixed with conforming loan balances increased from 3.37% to 3.38%. Points remained unchanged at 0.30 (incl. origination fee) for 80% LTV loans.

 

  • Average 30-year rates for jumbo loan balances increased from 3.66% to 3.70. Points decreased from 0.30 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 9.3% in the week ending 5th June. In the week prior, the Index had decreased 3.9%.

The Refinance Index increased by 11% and was 80% higher than in the same week a year ago. In the previous week, the Refinance Index had fallen by 9%.

The refinance share of mortgage activity increased from 59.5% to 61.3% of total applications in the week. In the week prior, the share had fallen from 62.6% to 59.5% of total applications.

According to the MBA:

  • Both mortgage applications and refinances were on the rise. Pent-up demand from earlier in the spring, low mortgage rates, and the reopening of states across the U.S fueled demand.
  • Purchase activity increased for an 8th consecutive week as was up by 13% from a year ago.
  • Refinances moved higher for the first time in almost 2-months.

For the week ahead

It’s a relatively busy 1st half of the week for the Greenback.

Key stats from the U.S include May retail sales and industrial production figures, June manufacturing numbers and the weekly jobless claims.

With U.S states having begun to ease lockdown measures back in May, the market will be looking for a bounce back in spending.

The FED’s gloomy outlook on the economy could provide to be right, however. Unemployment levels are extremely high, which may limit any major rebound in retail sales.

June manufacturing numbers are also in focus, with the NY Empire State Manufacturing Index and Philly FED Manufacturing Index due out.

On the housing front, we would expect building permits and housing starts to have a muted impact, however.

Mid-week, FED Chair Powell could give the markets a 2nd dose of reality as he delivers testimony to Congress.

From elsewhere, industrial production figures from China will draw attention as will news updates on the coronavirus.

U.S Mortgage Rates Tick Up as Stimulus and Stats Point to a Speedier Recovery

Mortgage rose for the 1st time in 3-weeks in the week ending 4th June, delivering a 5th weekly gain in 11-weeks.

30-Year fixed rates increased by 3 basis points to 3.18%. In the previous week, 30-year fixed rates had fallen by 9 basis points to a new all-time low 3.15%.

Compared to this time last year, 30-year fixed rates were down by 64 basis points.

30-year fixed rates were also down by 176 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the heavier side through the 1st half of the week.

Key stats included the market’s preferred ISM private sector PMI numbers and ADP nonfarm employment figures for May.

Both the manufacturing and non-manufacturing PMIs reported a slower pace of contraction. The all-important non-manufacturing PMI rose from 41.8 to 45.4.

With the markets looking ahead to the official labor market numbers on Friday, the ADP numbers came in ahead of forecasts. In May, nonfarm employment fell by 2.76m, which was far better than a forecasted decline of 9m.

From elsewhere, rising PMIs from China and the Eurozone also drove demand for riskier assets in the week.

On the policy front, news of a sizeable fiscal stimulus from Germany and expectations of more across the EU and the U.S added to the pickup in risk appetite.

On the geopolitical risk front, there were also no major moves from Beijing or Washington to spook the markets.

A move away from the safe havens led to a rise in U.S Treasury yields and ultimately the uptick in mortgage rates.

Freddie Mac Rates

The weekly average rates for new mortgages as of 4th June were quoted by Freddie Mac to be:

  • 30-year fixed rates rose by 3 basis points to 3.18% in the week. Rates were down from 3.82% from a year ago. The average fee decreased from 0.8 to 0.7 points.
  • 15-year fixed remained unchanged at 2.62% in the week. Rates were down from 3.28% compared with a year ago. The average fee remained unchanged at 0.7 points.
  • 5-year fixed rates decreased by 3 basis points to 3.10% in the week. Rates were down by 42 points from last year’s 3.52%. The average fee remained unchanged at 0.4 points.

According to Freddie Mac, the economy continues to slowly recover. All signs are pointing to a solid recovery in home sales activity going into the summer.

Low mortgage rates are a key factor in this recovery. While homebuyer demand is up and has been broad-based across states, supply has been slow to improve.

Freddie Mac noted that the gap between supply and demand has widened even further than the large, pre-pandemic, gap.

Mortgage Bankers’ Association Rates

For the week ending 29th May, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, increased from 3.41 to 3.46%. Points decreased from 0.30 to 0.23 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances decreased from 3.42% to 3.37%. Points decreased from 0.33 to 0.30 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.71% to 3.66%. Points increased from 0.29 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, decreased 3.9% in the week ending 29th May. In the week prior, the Index had increased by 2.7%.

The Refinance Index slid by 9% from the previous week and was 137% higher from the same week one year ago. In the previous week, the Refinance Index had declined by 0.2%.

The refinance share of mortgage activity slid from 62.6% to 59.5% of total applications in the week. In the week prior, the share had fallen from 64.3% to 62.6% of total applications.

According to the MBA:

  • Purchase applications continued their recent ascent, rising by 5% last week and 18% compared to a year ago.
  • Pent up demand from the lockdown drove the recovery from the weekly declines seen earlier in the spring.
  • In spite of this, there are still many households affected by the widespread job losses and economic downturn.
  • High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications near-term.
  • Refinance applications fell for a 7th consecutive week. Earlier in the year, refinances had accounted for a peak of 76% of total applications.

For the week ahead

It’s a relatively quiet 1st half of the week for the Greenback.

Key stats include May inflation figures and the weekly jobless claims figures. We will expect the markets to brush aside JOLTs job openings for April.

The main event of the week is the FED’s monetary policy decision on Wednesday. FOMC economic projections and the FED’s interest rate projections will garner plenty of attention. Will there be further monetary policy support?  We aren’t expecting any talk of dropping rates to zero and the interest rate projections will likely reflect that.

Timelines on how long interest rates will remain at current levels and the FED’s plans, vis-à-vis unlimited purchases of government bonds and mortgage bonds will be of influence, however.

From elsewhere, trade data out of China in the early part of the week will also garner plenty of interest. Risk appetite may well drive Treasury yields northwards, as the EU and the U.S deliver another wave of fiscal support.

On the geopolitical risk front, any chatter from Beijing or Washington will influence risk sentiment in the week, however.

U.S Mortgage Rates Fall to a New All-time Low

Mortgage rates fell for a 2nd consecutive week in the week ending 28th May, delivering a 6th weekly decline in 10-weeks.

30-Year fixed rates fell by 9 basis points to a new all-time low 3.15%. In the previous week, mortgage rates had fallen by 4 basis points to 3.24%.

Compared to this time last year, 30-year fixed rates were down by 84 basis points.

30-year fixed rates were also down by 179 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the lighter side in the 1st half of the week. May’s consumer confidence figures and the weekly jobless claims numbers were the key drivers.

Consumer confidence only saw a marginal improvement, with concerns over labor market conditions weighing.

The weekly jobless claims came in higher than forecast on Thursday. In spite of a 2.123m rise, this was below the higher numbers seen in recent weeks that provided some support to riskier assets.

Away from the economic calendar, the continued easing of lockdown measures and progress towards a vaccine supported Treasury yields.

Negative sentiment towards the rising tension between the U.S and China did linger, however.

Ultimately, the link between yields and mortgage rates remained broken in the week. A continued rise in mortgages in forbearance contributed to the downward pressure on mortgage rates. According to the MBA, the total number of loans in forbearance increased from 8.16% of servicers’ portfolio volume to 8.36% as of 17th May.

Freddie Mac Rates

The weekly average rates for new mortgages as of 28th May were quoted by Freddie Mac to be:

  • 30-year fixed rates fell by 9 basis points to 3.15% in the week. Rates were down from 3.99% from a year ago. The average fee increased from 0.7 to 0.8 points.
  • 15-year fixed declined by 8 basis point to 2.62% in the week. Rates were down from 3.46% compared with a year ago. The average fee remained unchanged at 0.7 points.
  • 5-year fixed rates decreased by 4 basis points to 3.13% in the week. Rates were down by 47 points from last year’s 3.60%. The average fee remained unchanged at 0.4 points.

According to Freddie Mac, mortgage rates fell to a record low for the 3rd time in just the last few months.

The downward trend has had an impact on purchase demand that has rebounded from a 35% decline in mid-April to an 8% increase as of last week, year-on-year.

This is quite a rebound when considering the current economic environment. Freddie Mac also noted that refinance activity remains elevated, with average loan sizes of refinance borrowers seeing a $70,000 decline this year.

Mortgage Bankers’ Association Rates

For the week ending 22nd May, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.46 to 3.41%. Points decreased from 0.33 to 0.30 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances increased from 3.41% to 3.42%. Points remained unchanged at 0.33 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances increased from 3.66% to 3.71. Points decreased from 0.37 to 0.29 (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 2.7% in the week ending 22nd May. In the week prior, the Index had fallen by 2.6%.

The Refinance Index declined by 0.2% and was 176% higher than the same week a year ago. In the previous week, the Refinance Index had fallen by 6%.

The refinance share of mortgage activity fell from 64.3% to 62.6% of total applications in the week. In the week prior, the share had slipped from 67.0% to 64.3% of total applications.

According to the MBA:

  • Housing sector activity continued to rebound as various states reopened, leading to more buyers resuming their search.
  • Purchase applications increased 9% last week, marking the 6th consecutive weekly increase and a 54% jump since early April.
  • Purchase loan amounts increased steadily in recent weeks and now sits at its highest level since Mid-March.
  • Despite record-low mortgage rates, refinance was essentially flat while still 176% higher than last year.

For the week ahead

It’s a relatively busy 1st half of the week for the Greenback.

Key stats include May’s ISM Manufacturing and Non-Manufacturing PMIs and ADP nonfarm employment change figures.

The markets have looked at April as the bottom of the economic meltdown. Any fall back in ISM numbers will drive demand for U.S Treasuries. This may not translate into yet another weekly fall in mortgage rates, however.

On the employment front, the weekly jobless claims figures are also pointing to another sizeable drop in employment in May. This should leave the U.S Treasuries somewhat immune to another slide in the ADP headline number. On Thursday, weekly jobless claims and trade data are also due out.

Away from the stats, expect the market focus to be on the U.S and China. COVID-19 numbers and news updates also need monitoring. Any upward trend in new coronavirus cases in the U.S and the EU would also test market risk sentiment in the week.

On the positive front, however, is the continued easing of lockdown measures and progress towards a vaccine.

The continued upward surge in applications and dire labor market conditions could limit the downside in rates for the week ahead.

Real Estate Stats Show Big Wave Of Refinancing Is Coming

Current data released for the May Real Estate and Consumer Spending activity suggests a wave of refinancing is taking place – and not much else.  Pending home sales slipped to 69.  That level is 7.4 points below the lowest level in 2010 – at the height of the 2008-09 credit crisis that collapsed the global Real Estate values.  How big is this new low level in Pending home sales?  It’s HUGE.

It suggests the rate of sales in the US for Real Estate has collapsed beyond levels that were seen at the worst possible time in recent history (July 2010).  In fact, over the past 20 years, there has never been a time when the pending home sales index has collapsed below 74 to 75 – until today.

2008-2011 Pending Home Sales Data

Source: https://www.investing.com

The sudden collapse of Pending Home Sales as a result of the COVID-19 virus event should not have come as any surprise to skilled technical investors.  Don’t misread this data – there are still homes selling in the US market, buyers are just being far more selective and discerning in regards to their purchases and timing.

Anyone who understands Supply and Demand theory knows that when price levels are perceived to be excessive, consumers slow their purchases considerably as the supply is determined to be overvalued in price.  This slowing of purchasing results in a supply glut that will eventually push price levels lower (attempting to attract more buyers).

It is this process of shifting perceptions in the Supply and Demand relationship that is likely taking place right now in the Real Estate market.  Low rates in combination with the COVID-19 virus are not prompting more sales of Real Estate right now.  Consumers simply don’t have the confidence (perception) that future price appreciation in Real Estate will be substantially based on the current market environment.  Thus, the perception of the value of Real Estate changes from optimism to caution.

2020 Pending Home Sales Data

A large portion of the issue related to Real Estate is consumer confidence in their ability to earn real incomes and the stability of employment and opportunity related to their future.  The COVID-19 virus event has really disrupted a large portion of the US consumer market as well as the future expectations of consumers and spending habits.  This disruption is likely to take at least 12 to 24+ months to settle before any real bottom is likely to take place on a broad scale.

Real consumer spending has collapsed in April and May 2020.  Even though the US government has spent trillions attempting to support the US economy, the continued shutdown of cities and states has cut consumers’ jobs, incomes, and the need to go out and spend like normal.  Even though they may be saving some extra money throughout this time, the destruction to local and state economies/revenues is devastating.

May 2020 Real Consumer Spending Data

The one aspect of the low-interest rates that we do expect to peak soon is the refinance market.  Stronger homeowners with solid income opportunities are able to refinance at lower rates now and that activity seems to be spiking.  This is very similar to what happened in 2009-2011 where stronger consumers were able to take advantage of very low-interest rates and were able to shed the 5 to 7%+ mortgages and refinance at much lower levels.  Once these transactions peak, these homeowners will likely be settled in their homes for another 5 to 10+ years with new lower rates (unless something disrupts their financial/income situation).

May 2020 Mortgage Refinance Index

Concluding Thoughts:

Combining all of this data into a consensus analysis for technical traders, we come to the conclusion that a wave of refinancing has likely peaked and that consumers are now in the early stage of attempting to understand what the recovery will look like going forward over the next 6 to 12+ months.  Add into the mix that we have a US Presidential election taking place in 6 months and the potential policy and tax changes that could take place as a result of this election and we have a real “consumer abyss” setting up over the next 6+ months.

With the Fed doing all they can to support the markets, the COVID-19 virus still causing shutdowns and other issues and the consumer waiting for some clear skies and positive expectations, the US and global economy could be stuck in a mode of greatly decreased consumer activity over the next 6 to 12+ months – which translates into a shift in perspective related to business creation, optimism, income/earnings and much more.  A dramatic shift in consumer expectations over a longer period of time could result in far more damaging longer-term issues for assets, state and local governments and more.

Once the wave of refinancing is completed, we’ll have to see how the housing market data relates to increased consumer optimism.  At this point, we don’t believe anything is likely to change consumer attitudes until after the November 2020 elections.  Skilled technical traders should prepare for some really big price swings over the next 12+ months. This is the time for technical traders to shine with the setups and data that is being presented right now as well as in the future.

Please take a moment to visit www.TheTechnicalTraders.com/tti to learn more about our passive long term investing signals, Also, get our swing trading signals here www.TheTechnicalTraders.com/ttt.  I can’t say it any better than this…  I want to help you create success while helping you protect and preserve your wealth – it’s that simple.

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategist
Founder of Technical Trader Ltd.

 

U.S Mortgage Rates Fall Back as Purchasing Activity Continues to Rebound

Mortgage rates saw the downward trend resume in the week ending 21st May, delivering a 5th weekly decline in 9-weeks.

30-Year fixed rates fell by 4 basis points to 3.24%. In the previous week, mortgage rates had risen by 2 basis points to 3.28%.

The pullback left mortgage rates close to an all-time low in the week.

Compared to this time last year, 30-year fixed rates were down by 82 basis points.

30-year fixed rates were also down by 170 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the lighter side in the 1st half of the week. May’s prelim private sector PMIs, the Philly FED Manufacturing PMI, and the weekly jobless claims were in focus.

While private-sector numbers showed a slower pace of contraction, it was the weekly jobless claims that raised another red flag.

Initial jobless claims jumped by 2.438m in the week ending 15th May. The markets had hoped for a marked decline in response to an easing in lockdown measures.

On the monetary policy front, FED Chair Powell delivered a speech ahead of the week, while also giving testimony to lawmakers.

The FED Chair assured the markets that the FED had plenty of ammo to support the economic recovery late on Sunday. On Tuesday, the FED Chair did predict, however, that the economy would not fully recover until the end of 2021.

On Wednesday, the FOMC meeting minutes provided few surprises. The markets expect that monetary policy will see further easing before any tightening.

Of less influence in the week were housing sector numbers for April.

Building permits and housing starts slid by 20.8% and by 30.2% in April, month-on-month. Existing home sales also took a hit, with a 17.8% slide. The dire numbers came as lockdown measures hit housing sector activity in the month.

Since then, a pickup in purchase activity has been evident, limiting the effect of the numbers in the week.

On the geopolitical front, however, rising tensions between the U.S and China did provide some support for U.S Treasuries.

Concerns over the economic outlook and the FED’s somber assessment ultimately delivered the downside in rates.

Freddie Mac Rates

The weekly average rates for new mortgages as of 21st May were quoted by Freddie Mac to be:

  • 30-year fixed rates fell by 4 basis points to 3.24% in the week. Rates were down from 4.06% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed declined by 2 basis point to 2.70% in the week. Rates were down from 3.51% compared with a year ago. The average fee also remained unchanged at 0.7 points.
  • 5-year fixed rates decreased by 1 basis point to 3.17% in the week. Rates were down by 51 points from last year’s 3.68%. The average fee increased from 0.3 points to 0.4 points.

According to Freddie Mac, mortgage rates remained at sub-3.30% for a 4th consecutive week. The downward bias supported a jump in buyer demand, as lockdown measures fell away. Freddie Mac noted that purchase demand improved at a remarkably fast pace, leaving purchase demand flat compared to a year ago.

It was also noted that going forward, mortgage rates have room to decline as mortgage spreads remain elevated.

Mortgage Bankers’ Association Rates

For the week ending 15th May, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, increased from 3.37 to 3.46%. Points increased from 0.21 to 0.33 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances decreased from 3.43% to 3.41%. Points increased from 0.29 to 0.33 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.69% to 3.66. Points increased from 0.33 to 0.37 (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, fell by 2.6% in the week ending 15th May. In the week prior, the index had increased by 0.3%.

The Refinance Index fell by 6% from the previous week and was up by 160% from the same week one year ago. In the previous week, the Refinance Index had declined by 3%.

The refinance share of mortgage activity slipped from 67.0% to 64.3% of total applications in the week. In the week prior, the share had fallen from 70.0% to 67.0% of total applications.

According to the MBA:

  • Applications for home purchases continued to recover after April’s slide, with activity rising for a 5th consecutive week.
  • Purchase activity, which was 35% below a year-ago levels 6-weeks ago, was down by just 1.5%.
  • Despite mortgage rates remaining close to record-lows, refinance activity fell to its lowest level in over a month. A retreat in cash-out refinance lending contributed as credit conditions tightened.
  • The MBA is expecting the low mortgage rate environment to support refinance activity over the remainder of the year, however.

For the week ahead

It’s a relatively quiet start to the week for the Greenback.

After Monday’s public holiday, consumer confidence figures for May on Tuesday and the weekly jobless claims on Thursday will be the key drivers.

We would expect the housing sector numbers and durable goods orders for April to have a muted impact on the yields.

Rising tensions between the U.S and China, however, could deliver further demand for U.S Treasuries in the week.

The markets will also need to monitor the COVID-19 numbers. As lockdown measures ease, governments will want to avoid a spike in new cases that would cause a review of easing plans.

U.S Mortgage Rates Continue to Hover at Close to Record Lows

Mortgage rates saw another slight uptick in the week ending 14th May to deliver just a 4th weekly increase in 8-weeks.

30-Year fixed rates rose by 2 basis points to 3.28%. In the previous week, mortgage rates had risen by 3 basis points to 3.26%.

In spite of the uptick, mortgage rates continued to hover close to an all-time low.

Compared to this time last year, 30-year fixed rates were down by 79 basis points.

30-year fixed rates were also down by 168 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the lighter side in the 1st half of the week once more. April inflation figures were in focus, which reflected the anticipated easing in inflationary pressures.

A slump in consumption and sliding crude oil prices left the U.S annual rate of core inflation at 1.40%. In March, the annual rate of core inflation had stood at 2.10%.

On Thursday, the weekly jobless claims figures did little to inspire, with initial jobless claims surging by another 2.981m.

With the stats skewed to the negative, FED Chair Powell added to the risk aversion in the week. In a scheduled speech on Wednesday, the FED Chair delivered a frank and dire outlook on the U.S economy.

In spite of the negative sentiment across the week, continued plans to ease lockdown measures have provided support.

Freddie Mac Rates

The weekly average rates for new mortgages as of 14th May were quoted by Freddie Mac to be:

  • 30-year fixed rates rose by 2 basis points to 3.28% in the week. Rates were down from 4.07% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed declined by 1 basis point to 2.72% in the week. Rates were down from 3.53% compared with a year ago. The average fee also remained unchanged at 0.7 points.
  • 5-year fixed rates increased by 1 basis point to 3.18% in the week. Rates were down by 48 points from last year’s 3.56%. The average fee remained unchanged at 0.3 points.

According to Freddie Mac, mortgage rates continued to sit near to record lows as homebuyer demand slowly picked up.

While purchase demand tumbled to a new low in mid-April, purchase demand is now down by just 10% from a year ago. In spite of the pickup in demand, inventories are low and declining, however, which will limit purchase activity.

Mortgage Bankers’ Association Rates

For the week ending 8th May, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, remained unchanged at 3.37. Points increased from 0.20 to 0.21 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances increased from 3.40% to 3.43%. Points decreased from 0.30 to 0.29 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances remained unchanged at 3.69%. Points decreased from 0.34 to 0.33 (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 0.3% in the week ending 8th May. In the week prior, the Index had increased by just 0.1%.

The Refinance Index fell by 3% from the previous week and was up by 201% from the same week one year ago. In the week prior, the Refinance Index had declined by 2%.

The refinance share of mortgage activity fell from 70.0% to 67.0% of total applications in the week. In the previous week, the share had fallen from 71.6% to 70% of total applications.

According to the MBA:

  • The recovery in purchase applications continued, with most large states reporting increases in activity.
  • Purchase activity is expected to continue recovering as social distancing measures are eased across the U.S.
  • Mortgage rates stayed close to record-lows, while refinance applications fell for a 4th consecutive week.
  • In spite of the fall in refinance applications, refinance activity was up by 200% from a year ago.

On Thursday, the MBA also reported April’s monthly application figures. Compared with March 2020, applications fell by 25%.

For the week ahead

It’s a relatively quiet start to the week for the Greenback.

In the 1st half of the week, economic data is limited to April housing sector figures. Building permits and housing starts are due out and will likely reflect the construction sector’s concerns over COVID-19.

On Thursday, however, economic data is on the heavier side and will likely influence U.S Treasury yields.

May’s prelim private sector PMIs, the Philly FED Manufacturing Index, and weekly jobless claims figures are due out of the U.S.

As lockdown measures ease, the markets are looking for an improvement in the stats. Another round of weak figures will drive demand for U.S Treasuries, which should pin back mortgage rates.

Away from the economic calendar, geopolitics and COVID-19 news will also provide direction in the week ahead.

Real Estate Showing Signs Of Collateral Damage – Part I

As we continue to digest economic and global data, our researchers have focused on Real Estate as we believe the contraction in the US economy, spanning corporate, main street, and millions of Americans, will quickly reflect in a slowing Real Estate market.  Our researcher attempted to dive into the most recent data from Realtor.com (https://www.realtor.com/research/) to identify any trends or insights we could find to prepare for a broader contagion event.

Current data suggests the US Real Estate market has begun a dramatic slowdown even though the listing and pricing data does not reflect this data yet.  In short, more homes are being pulled from active listings and those that are still listed are sellers that can wait out their price or are under pressure to sell because of other factors. Historically, Summer months typically result in a moderate decrease in price levels as more homes get listed for sale and “Days On Market” (DOM) lengthens.  Something big is starting to take place almost everywhere in the US as current data suggests inventory is shrinking, price levels are still moderately high and DOM level has increased dramatically.

News of recent delinquencies in the mortgage market shows an incredible increase in the number of mortgages under pressure.  We believe many borrowers will attempt to cash out of the market over the next 90+ days while price levels are high.  Many of these borrowers will be rolling the dice while they hold onto their homes hoping the economy/jobs come back before the end of 2020 while they watch the value of their homes decline.

California Days On Market YoY Chart

Overall, across the entire US, median listing price levels have increased 1% YoY while Days on Market has increased 6% YoY and Active Listings have decreased 15% YoY.  Reading between the lines, this suggests to our researchers that sellers are trying to capture peak price levels while sales activity continues to decrease.  This also suggests that buyers are shifting into a more conservative buying mode – waiting for the right deal, better prices, and more distressed sellers.

Locally, most of the major markets have seen an incredible change in listing price, DOM, and active listing data over the past 30+ days.  This data represents the YoY data change related to data from April 11, 2020, to May 9, 2020.  This data reflects how trends are changing and how total counts are changing – not total price level changes or total trend count changes on a YoY basis.

Our research team believes this data suggests sellers are still entering the market trying to take advantage of high price levels, yet they are not entering the market as quickly as they were 30+ days ago (hence the drop in new listing data).  Additionally, the DOM increases suggest buyers are slowing their activities as well.  Simple Supply and Demand theory suggests when prices are high and buyers begin to lose faith in future price increases – the cycle shifts from rising price levels to falling price levels as buyers begin to wait out the better deals and wait for the bottom in the markets to setup.

I was on TraderTV a few weeks back with Mr. Wonderful (Kevin O’Leary) and he talked about the issue with real estate and his way to deal with it in this video clip.

In Part II of this article, we’ll continue to explore more data that suggests the Real Estate sector may become a big part of the next phase of the global economic collapse.  Early data suggests the market is shifting away from a seller’s market into a buyers market fairly quickly.  If our research is correct, all segments of Real Estate will become a bigger problem for banks and the economy as the shutdown continues.

We suggest you read this article from March 2020, WE ARE CONCERNED ABOUT THE REAL ESTATE MARKET:

If our research is correct, this shift is taking place right now and will likely continue into Summer 2020 as Main Street and millions of businesses suffer from the COVID-19 virus shutdowns.  Common sense would suggest an economic contraction reflecting millions in lost jobs, a major contraction in retail and other segments of the US economy and a severe issue with commercial real estate may lead to a broader contraction in residential real estate.  Buyers slow their purchases as more homeowners come under increasing economic pressure, prices begin to decline, and the cycle shifts from a seller’s market to a buyers market.

Right now, we are advising our clients to wait for stronger confirmed trading setups as we believe the current US market is still in a no man’s land related to price levels and future trends.  There is still a moderate change the US Fed buying will prompt a bit more upside price trend, but our modeling systems and technical indicators are suggesting a “double-dip” low will form as the collateral damage continues to become known.  This is the time for skilled technical traders to play very conservatively with their capital and to target bigger trends when the setup.

The next 24+ months are certain to be full of incredible opportunities for skilled technical traders – yet also full of risks.  We’ve already received emails from individuals who have been taking aggressive trades in certain sectors and gotten burned.  Follow our research and please understand the markets will do what they are going to do.  Our job is to find the right opportunities and to capitalize on them for profits.

I have to toot my own horn here a little because subscribers and I had our trading accounts close at a new high watermark for our accounts. We not only exited the equities market as it started to roll over, but we profited from the sell-off in a very controlled way. Also, we locked in more with this bounce in the markets, along with a move in natural gas and we are sitting with some gains in our new position in the next hot sector.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. 2020 is going to be an incredible year for skilled traders.  Don’t miss all the incredible moves and trade setups.

I hope you found this informative, and if you would like to get a pre-market video every day before the opening bell, along with my trade alerts. These simple to follow ETF swing trades have our trading accounts sitting at new high water marks yet again this week, not many traders can say that this year.

We all have trading accounts, and while our trading accounts are important, what is even more important are our long-term investment and retirement accounts. Why? Because they are, in most cases, our largest store of wealth other than our homes, and if they are not protected during a time like this, you could lose 25-50% or more of your entire net worth. The good news is we can preserve and even grow our long term capital when things get ugly like they are now and ill show you how and one of the best trades is one your financial advisor will never let you do because they do not make money from the trade/position.

If you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Long-Term Investing Signals which we issued a new signal for subscribers.

Ride my coattails as I navigate these financial markets and build wealth while others lose nearly everything they own during the next financial crisis.

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

 

U.S Mortgage Rates Hover Close to Record Lows as Applications Tick Up

Mortgage rates saw a slight uptick in the week ending 7th May to deliver just the 3rd weekly increase in 7-weeks.

30-Year fixed rates rose by 3 basis points to 3.26%. In the previous week, mortgage rates had slid by 10 basis points to 3.23%.

In spite of the uptick, mortgage rates continued to hover close to last week’s record low.

Compared to this time last year, 30-year fixed rates were down by 84 basis points.

30-year fixed rates were also down by 168 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the lighter side in the 1st half of the week.

Key stats included April service sector PMIs and ADP nonfarm employment change figures for April and the weekly jobless claims numbers.

The market’s preferred ISM Non-Manufacturing PMI fell from 52.5 to 41.8, with the ADP reporting 20.236m job losses in April.

The markets had anticipated some quite dire numbers, which did prevent a meltdown across the global financial markets.

On Thursday, initial jobless claims jumped by another 3.169m, however, which raised further concerns over the economic recovery.

From elsewhere, better than expected trade data from China supported the demand for riskier assets and U.S Treasury yields.

In spite of the dire employment figures, Treasury yields ticked up mid-week as the U.S government raised the size of its longer-term bond auctions.

On the geopolitical front, rising tensions between the U.S and China and the U.S and Iran were negatives, while the continued easing of lockdown measures was positive.

Freddie Mac Rates

The weekly average rates for new mortgages as of 7th May were quoted by Freddie Mac to be:

  • 30-year fixed rates rose by 3 basis points to 3.26% in the week. Rates were down from 4.10% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed declined by 4 basis points to 2.73% in the week. Rates were down from 3.57% compared with a year ago. The average fee rose from 0.6 points to 0.7 points.
  • 5-year fixed rates increased by 3 basis points to 3.17% in the week. Rates were down by 46 points from last year’s 3.63%. The average fee slipped from 0.4 points to 0.3 points.

According to Freddie Mac, mortgage rates stood at or near record lows for a 5th consecutive week supporting refinancing activity.

While purchase demand tumbled by 35% year-on-year, in mid-April, demand has marginally improved in the last few weeks.

Mortgage Bankers’ Association Rates

For the week ending 1st May, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.39% to 3.37. Points remained unchanged at 0.20 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances decreased from 3.43% to 3.40%. Points decreased from 0.34 to 0.30 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.72% to 3.69%. Points increased from 0.33 to 0.34 (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 just 0.1% in the week ending 1st May. In the week prior, the Index had fallen by 3.3%.

The Refinance Index declined by 2% from the previous week and was up by 210% from the same week a year ago. In the previous week, the Index had slid by 7%.

The refinance share of mortgage activity fell from 71.6% to 70% of total applications in the week. In the week prior, the share had decreased from 75.4% to 71.6%.

According to the MBA:

  • Purchase application volume was unchanged last week, despite mortgage rates falling to a new record 3.40%.
  • Refinance applications declined, as lenders offered higher rates for refinances than for purchase loans.
  • Other lenders suspended the availability of cash-out refinance loans due to their inability to sell then on to Fannie Mae and Freddie Mac. This also contributed to the decline in refinance applications.
  • Purchase volume increased for a 3rd consecutive week, though remains close to 19% below levels seen a year ago.
  • The deficit has decreased, however, as more states reopen.

For the week ahead

It’s a relatively quiet start to the week for the Greenback.

April inflation figures are due out on Tuesday and Wednesday, with the weekly jobless claims on Thursday.

While we will expect some influence, geopolitics and news updates on COVID-19 easing measures will likely take center stage.

Treasury yields and demand for mortgage applications could hit reverse should there be an upward trend in new coronavirus cases that leads to a pause in easing lockdown measures.

Another surge in initial jobless claims would also be an issue. With unemployment hitting levels not seen since the Great Depression, credit conditions are only going to get tougher…

U.S Mortgage Rates Hit Record Lows as Application Volume Begins to Recover

Mortgage rates hit reverse in the week ending 30th April, with the fall in mortgage rates the 4th in 6-weeks.

30-Year fixed rates slid by 10 basis points to 3.23%. In the previous week, mortgage rates had risen by 2 basis points to 3.33%.

The reversal at the end of April left mortgage rates at an all-time low.

Compared to this time last year, 30-year fixed rates were down by 91 basis points.

30-year fixed rates were down by 171 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the heavier side in the week.

Key stats included 1st quarter GDP and the weekly initial jobless claims figures, both of which weighed on risk appetite.

In the 1st quarter, the U.S economy contracted by 4.8%, which was far greater than a forecasted 4.0% contraction.

The markets had hoped that the recent surge in unemployment claims would abate in the week ending 24th April. Disappointment weighed on risk appetite, however, with 3.839m initial jobless claims in the week.

For those looking for a v-shaped economic rebound, the economic data and continued surge in unemployment suggested otherwise.

On the monetary policy front, the FED held rates unchanged on Wednesday, while acknowledging the economic woes ahead.

The assurance of continued support provided temporary relief mid-week. For U.S mortgage rates, the FED has certainly contributed to the decline to record lows, with its ability to purchase an unlimited amount of mortgage-backed securities.

Adding to the downside for mortgage rates has been the demand for U.S Treasuries and lenders lowering mortgage rates. The demand for purchase applications had tumbled in March. Existing home and new home sales slid by 8.5% and by 15.4% respectively. The lower demand and reduction in application backlogs allowed lenders to lower rates.

Freddie Mac Rates

The weekly average rates for new mortgages as of 30th April were quoted by Freddie Mac to be:

  • 30-year fixed rates slid by 10 basis points to 3.23% in the week. Rates were down from 4.14% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed fell by 9 basis points 2.77% in the week. Rates were down from 3.60% compared with a year ago. The average fee slipped from 0.7 points to 0.6 points.
  • 5-year fixed rates tumbled by 14 basis points to 3.14% in the week. Rates were down by 54 points from last year’s 3.68%. The average fee rose from 0.3 points to 0.4 points.

According to Freddie Mac, it is the size and depth of the secondary mortgage market that is keeping rates at record lows.

Low rates continue to support refinancing activity and have provided modest support to purchase demand.

While mortgage rates at current levels are positive for the real estate sector, the COVID-19 pandemic remains negative.

Mortgage Bankers’ Association Rates

For the week ending 24th April, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, increased from 3.33% to 3.39. Points increased from 0.19 to 0.20 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances decreased from 3.45% to 3.43%. Points increased from 0.29 to 0.34 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.81% to 3.72%. Points decreased from 0.34 to 0.33 (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, fell by 3.3% in the week ending 24th April. In the week prior, the index had decreased by 0.3%.

The Refinance Index slid by 7% from the previous week and was up by 218% from the same week one year ago. In the previous week, the Index had fallen by 1%.

The refinance share of mortgage activity decreased from 75.4% to 71.6% in the week. In the week prior, the share had fallen from 76.2% to 75.4%.

According to the MBA:

  • Purchase applications increased by 12% in the week to the strongest level in almost a month.
  • The 10 largest states reported increases in purchase activity, which is potentially a sign of the start of an upturn in the pandemic-delayed spring home buying season.
  • Recovering from a 5-year low, easing lockdown measures supported the pickup in purchase activity.
  • A fall in mortgage rates to record lows contributed to the jump in purchase applications.
  • For refinances, credit availability for refinance loans have impacted rates for refinance mortgages.

For the week ahead

It’s another relatively busy week for the Greenback.

Key stats include April’s ISM Non-Manufacturing PMI numbers and April’s ADP nonfarm employment change figures will be in focus. Expect the weekly jobless claims figures to also garner plenty of attention.

Following 1st quarter GDP numbers last week, the markets will likely brush aside any 1st quarter stats in the week. These include factory orders and trade data for March. The impact of COVID-19 on the economy is expected to be far more servere in the 2nd quarter as a result of lockdown measures.

Outside of the numbers, expect updates on the testing of COVID-19 treatment drug remdesivir and easing of lockdown measures to remain a key driver.

On the geopolitical front, there is Trump’s accusations of China spreading the virus and tensions in the Middle East to also consider.

U.S Mortgage Rates See Rates Rise as Lenders Price in Risk Amidst the Economic Uncertainty

Mortgage rates moved northwards in the week ending 23rd April, with mortgage rates up just twice in 5-weeks. In the previous week, mortgage rates had fallen by 2 basis points to 3.31%.

While the downward trend failed to continue, 30-year-fixed rates remained close to record lows.

Compared to this time last year, 30-year fixed rates were down by 87 basis points.

30-year fixed rates were down by 161 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the heavier side in the week. Key stats included the weekly jobless claims and April prelim private sector PMI numbers.

Both sets of numbers disappointed. In the week ending 17th April, initial jobless claims increased by another 4.427m. Yet another jump in unemployment sent the number of unemployed hurtling to levels last seen in the Great Depression.

Things were not much better across the services sector, with the lockdown sinking the PMI from 39.8 to 27.0 in April.

The manufacturing sector contraction was less severe, with the PMI falling from 48.5 to 36.9 but it was of little consolation.

From the housing sector, March existing home sales slid by 8.5%, with new home sales tumbling by 15.4%. There had been hopes of a bounce-back in housing sector activity, supported by current mortgage rates. The surge in unemployment, however, raises some concerns over the near-term outlook.

Economic uncertainty, stemming from particularly dire economic data led to a fall in 10-year Treasury yields in the week.

The uptick in mortgage rates, however, had less to do with U.S Treasury yields and more to do with the setting of rates by lenders. Lenders have begun to price in a risk premium into mortgage rates that have led to a break in the correlation between yields and mortgage rates.

10-year Treasury yields also fell in the week in response to WTI’s May Futures sliding into negative territory early in the week.

Freddie Mac Rates

The weekly average rates for new mortgages as of 23rd April were quoted by Freddie Mac to be:

  • 30-year fixed rates rose by 2 basis points to 3.33% in the week. Rates were down from 4.20% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed rose by 6 basis points 2.86% in the week. Rates were down from 3.64% compared with a year ago. The average fee held steady at 0.7 points.
  • 5-year fixed rates fell by 6 basis points to 3.28% in the week. Rates were down by 49 points from last year’s 3.77%. The average fee held steady at 0.3 points.

According to Freddie Mac, mortgage rates have stabilized over the last few weeks. The markets continue to search for direction amidst the doom and gloom of the economic data.

While both fiscal and monetary policy support has delivered upside to the financial markets, Freddie Mac sees a deep economic contraction weighing ‘amidst the uncertainty about the recovery formation’.

Mortgage Bankers’ Association Rates

For the week ending 17th April, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.45% to 3.33. Points remained unchanged at 0.19 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances remained unchanged at 3.45%. Points also remained unchanged at 0.29 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances increased from 3.80% to 3.81%. Points increased from 0.23 to 0.34 (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, decreased by 0.3% in the week ending 17th April. In the week prior, the Index had increased by 7.3%.

The Refinance Index decreased by 1% and was 225% higher than the same week a year ago. In the previous week, the Index had risen by 10%.

The refinance share of mortgage activity decreased from 76.2% to 75.4% in the week. In the week prior, the share had increased by 74.2% to 76.2%.

According to the MBA:

  • A marginal fall in refinance activity was offset by a 2% increase in purchase applications.
  • In spite of the weekly gain, the Purchase Index remained close to its lowest level since 2015 and was down by 30% year-on-year.
  • Some buyers and sellers have delayed decisions as a result of the pandemic-related economic stoppage. As a result, inventories and buyer traffic were on the slide, leading to existing home sales falling to their slowest annual pace in almost a year.

For the week ahead

It’s another relatively busy week for the Greenback.

Key stats include April consumer confidence figures, 1st quarter GDP numbers, and the weekly jobless claims figures.

We would expect inflation and trade data to have a muted impact in the week.

While the stats will provide some direction, the FED’s monetary policy decision on Wednesday will be the key driver.

The markets may not be expecting another move just yet, but the markets will expect some forward guidance in the press conference…

Away from the economic calendar, COVID-19 news and updates will be in focus along with crude oil prices…

On the geopolitical front, rising tensions in the Middle East may also garner some attention.

U.S Mortgage Rates Ease Back as Purchase Applications Continue to Fall

Mortgage rates eased back in the week ending 16th April, with rates down for a 3rd week in 4. In the previous week, mortgage rates had held steady at 3.33%.

The downward trend resumed after having seen mortgage rates on the rise in mid-March. The upward trend had been due to a surge in demand stemming from falling mortgage rates. At the turn of the quarter, however, rates hit reverse as the FED delivered and purchase applications hit reverse.

Compared to this time last year, 30-year fixed rates were down by 86 basis points.

30-year fixed rates were also down by 163 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the heavier side in the week. Key stats included March retail sales figures, April manufacturing numbers, and the weekly jobless claims numbers.

Core retail sales slid by 4.5%, month-on-month, in March, with retail sales tumbling by 8.7%.

Manufacturing figures also sounded the alarm bells in April. The NY Empire State Manufacturing Index slid from -21.5 to -78.2, with the Philly FED Index tumbling from -12.7 to -56.6.

The weekly jobless claims figures were also dire, with a 5.245m increase in jobless claims in the week ending 10th April.

From the housing sector, building permits and housing starts suggested a shift in sentiment across contractors. Building permits fell by 6.8%, with housing starts tumbling by 22.3%.

In reality, when considering the economic data on its own, mortgage rates should have seen a more significant decline.

Talk of U.S member states planning to reopen and a downward trend in new coronavirus cases supported yields early in the week.

This was in spite of the IMF delivering some quite alarming economic growth forecasts for 2020 in the early part of the week. For the U.S, the IMF forecasted a 5.9% contraction in 2020. Perhaps more importantly, the IMF also talked down the chances of a V-shaped economic rebound…

Freddie Mac Rates

The weekly average rates for new mortgages as of 16th April were quoted by Freddie Mac to be:

  • 30-year fixed rates fell by 2 basis points to 3.31% in the week. Rates were down from 4.17% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed rose by 3 basis points 2.80% in the week. Rates were down from 3.62% compared with a year ago. The average fee increased from 0.6 points to 0.7 points.
  • 5-year fixed rates fell by 6 basis points to 3.34% in the week. Rates were down by 44 points from last year’s 3.78%. The average fee held steady at 0.3 points.

According to Freddie Mac, mortgage rates continued to hover close to all-time lowers for a 3rd consecutive week. The low rate environment continued to support refinance activity, while concerns over the economy weighed on purchase applications.

Freddie Mac noted that, while monthly economic data was driving the markets lower in the week, these are lagging indicators. Realtime daily economic activity metrics, in contrast, suggest that the economy may be close to bottoming out.

From a market perspective, it is no longer about by how much the economy has contracted, but for how long it will contract.

Mortgage Bankers’ Association Rates

For the week ending 10th April, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.54% to 3.45. Points remained unchanged at 0.19 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances decreased from 3.49% to 3.45%. Points increased from 0.28 to 0.29 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.87% to 3.80%. Points fell from 0.26 to 0.23 (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 7.3% in the week ending 10th April. In the week prior, the index had tumbled by 17.9%.

The Refinance Index increased by 10% and was 192% higher than the same week a year ago. In the previous week, the Index had slid by 19%.

The refinance share of mortgage activity increased from 74.2% to 76.2% in the week. In the week prior, the share had declined from 75.9% to 74.2%.

According to the MBA:

  • 30-year fixed mortgage rates fell to the lowest level in the MBA’s survey at 3.45%.
  • The decline came in spite of rising Treasury yields, suggesting that the MBS market is stabilizing.
  • Lenders also progressed through backlogs, allowing for mortgage rates to be lowered.
  • Refinance activity has experienced a volatile 4-weeks, with lower rates expected to benefit many borrowers.
  • Purchase applications fell for a 5th consecutive week, with the Purchase Index down by approx. 35% from the 1st week of March.
  • The purchase market is expected to rebound, however, as long as the measures to reduce the spread of COVID-19 are successful.

For the week ahead

It’s a relatively busy week for the Greenback.

Key stats include April private sector PMIs and the weekly jobless claims figures due out on Thursday.

From the housing sector, March existing home sales and new home sales figures are also due out.

While we can expect the stats to influence yields, it will ultimately come down to government plans to ease containment measures.

Last week we heard of a phased plan to kick-start the U.S economy. Expect further details of this and COVID-19 numbers to remain the key driver in the week.

More details on a new drug that is reportedly effective in treating COVID-19 will also influence.

U.S Mortgage Rates Hold Steady Unemployment Numbers Sink Applications

Mortgage rates failed to move in the week ending 9th April, bring to an end a run of 2 consecutive weekly declines.

Mortgage rates had been on the rise in mid-March due to a surge in demand stemming from a COVID-19 driven slide in mortgage rates. At the turn of the quarter, however, rates hit reverse as the FED delivered and applications began to tumble.

Lenders had had to increase rates to deter applications as backlogs continued to rise and capacity issues hit processing times.

Compared to this time last year, 30-year fixed rates were down by 79 basis points.

30-year fixed rates were also down by 161 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the lighter side in the week. The markets had to wait until Thursday for key stats to consider. Earlier in the week, February JOLTs job openings were ignored following the previous week’s nonfarm payrolls and the weekly jobless claims figures.

On Thursday, the stats were skewed to the negative once more. Initial jobless claims jumped by 6.6m in the weekend ending 3rd April, with consumer sentiment taking a hit in April.

While the stats were on the negative front, appetite for riskier assets was on the rise as the number of new coronavirus cases eased in the week.

On Thursday, the FED added further support to the U.S economy, which offset market angst over the economic outlook.

Freddie Mac Rates

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

  • 30-year fixed rates held steady at 3.33% in the week. Rates were down from 4.12% a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed fell by 5 basis points to 2.77% in the week. Rates were down from 3.60% a year ago. The average fee remained unchanged at 0.6 points.
  • 5-year fixed rates remained unchanged at 3.40% in the week. Rates were down by 40 points from last year’s 3.80%. The average fee held steady at 0.3 points.

According to Freddie Mac, there is room for rates to go lower. This year, 10-year Treasury yields have fallen by a full percentage point, while mortgage rates have only fallen by 33 basis points. As financial market conditions improve, Freddie Mac expects mortgage rates to resume a downward trend through the 2nd half of the year.

Mortgage Bankers’ Association Rates

For the week ending 3rd April, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.57% to 3.54. Points decreased from 0.28 to 0.19 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances increased from 3.47% to 3.49%. Points decreased from 0.33 to 0.28 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances increased from 3.84% to 3.87%. Points fell from 0.31 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, slid by 17.9% in the week ending 3rd April. In the week prior, the Index had increased by 15.3%.

The Refinance Index slid by 19% and was up by 144% from the same week a year ago. In the previous week, the Index had surged by 26%.

The refinance share of mortgage activity declined from 75.9% to 74.2% in the week ending 3rd April. In the week prior, the Index had increased from 69.3% to 75.9%.

According to the MBA:

  • Mortgage applications fell as economic weakness and a surge in unemployment continued to weigh on the housing market.
  • Purchase activity declined once more, with the index falling to its lowest level since 2015. Compared with a year ago, the Index was down by 33%.
  • With much less liquidity and tighter credit in the jumbo market, average loan sizes were also in decline. Jumbo mortgage rate rose to the highest level since January as a result.
  • Given the ongoing mortgage rate volatility and current lack of liquidity in certain sectors of the MBS market, swings are expected to continue in refinance activity.

For the week ahead

It’s a busy week for the Greenback.

Key stats include March retail sales figures due on Wednesday and April’s Philly FED Manufacturing PMI on Thursday.

Expect March industrial production figures and NY Empire State Manufacturing Index numbers on Wednesday to also influence yields.

Following the FED’s move last week, however, the markets will be somewhat resilient to any weak numbers.

From the housing sector, March building permits and housing starts may give some initial clues of what impact COVID-19 has had on sentiment in the sector.

The weekly jobless claims figures will also garner plenty of attention.

Outside of the numbers, chatter from the Oval Office and the daily coronavirus updates will also influence. A continued fall in the number of new cases each day would support a pickup in mortgage rates. In reality, however, applications may well continue to slide near-term, which should also pin back mortgage rates.

U.S Mortgage Rates Slide Again, with Purchase Applications also on the Slide

Mortgage rates fell for a 2nd consecutive week in the week ending 2nd April, with the downside attributed to lenders lowering rates as application backlogs slid.

Mortgage rates had been on the rise in mid-March due to a surge in demand stemming from a COVID-19 driven slide in mortgage rates.

Lenders had had to increase rates to deter applications as backlogs continued to rise and capacity issues hitting processing times.

Adding to the 2nd consecutive weekly fall was the FED’s unlimited bond purchasing program. This includes the purchasing of mortgage-backed securities.

Compared to this time last year, 30-year fixed rates were down by 75 basis points.

30-year fixed rates were also down by 161 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the busier side through the week, with March private sector PMIs and labor market figures in focus.

While both the ISM Manufacturing PMI and ISM Non-Manufacturing PMI reported continued to expand in March, it was labor market figures that spooked the markets.

While ADP Nonfarm Employment fell by just 27,000 in March, initial jobless claims surged by 6,648,000 in the week ending 27th March. The new record towered above the previous week’s 3,283,000, which had also been a record high.

The markets had expected another sharp rise but not by such a number, with economists having forecasted claims rising by 3,500,000.

With consumer confidence on the decline in March, the extended lockdown in the U.S in April will weigh heavily on confidence and spending. The PMIs may have pointed to continued expansion in March but it could well be a different story in April, particularly for the services sector.

All of this, coupled with the continued spread of the coronavirus and forecasts of between 100,000 and 240,000 deaths added further downward pressure on mortgage rates.

Freddie Mac Rates

The weekly average rates for new mortgages as of 2nd April were quoted by Freddie Mac to be:

  • 30-year fixed rates fell by 17 basis points to 3.33% in the week. Rates were down from 4.08% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed fell by 10 basis points 2.82% in the week. Rates were down from 3.56% compared with a year ago. The average fee remained unchanged at 0.6 points.
  • 5-year fixed rates rose by 6 basis points to 3.40% in the week. Rates were down by 26 points from last year’s 3.66%. The average fee held steady at 0.3 points.

According to Freddie Mac, the 2nd consecutive weekly decline reflected improvements in market liquidity and sentiment. While the market has stabilized relative to prior weeks, homebuyer demand has declined in response to current economic conditions. Freddie Mac pointed out that pending economic stimulus is on the way, however, to provide support to both consumers and businesses.

Mortgage Bankers’ Association Rates

For the week ending 27th March, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.69% to 3.57. Points decreased from 0.43 to 0.28 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances decreased from 3.82% to 3.47%. Points decreased from 0.35 to 0.33 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances remained unchanged at 3.84%. Points fell from 0.35 to 0.31 (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 15.3% in the week ending 27th March. In the week prior, the Index had tumbled by 29.4%.

The Refinance Index surged by 26% and was up by 168 from the same week a year ago. In the previous week, the Index had slumped by 34%.

The refinance share of mortgage activity increased from 69.3% to 75.9% in the week ending 27th March.  In the week prior, the share had decreased from 74.5% to 69.3%.

According to the MBA:

  • Mortgage applications and rates continue to experience significant volatility from economic and financial market uncertainty.
  • The continued spread of the coronavirus has driven the uncertainty and a bleaker economic outlook.
  • A marked surge in job losses likely caused potential homebuyers to a pullback in the week.
  • Purchase applications were down by over 10%. After double-digit annual growth to start 2020, activity has fallen off last year’s pace for 2 consecutive weeks.

For the week ahead

It’s a relatively quiet 1st half of the week for the Greenback.

Key stats in the week are limited to JOLTs job openings, March inflation, and April consumer sentiment figures. The weekly jobless claims figures are also in focus.

February JOLTs job openings should have a muted impact on yields, with consumer sentiment and weekly jobless claims likely to have the greatest impact.

The markets will expect another surge in claims and a slide in sentiment. The sentiment figure will also give an indication of the consumer view on the administration’s Stimulus Bill. $1,200 per person may not be of much comfort when considering what lies ahead.

While the stats will influence, the coronavirus numbers will remain the key driver in the week. Last week, Trump had warned of a tough 2-weeks ahead…

U.S Mortgage Rates Hit Reverse as Applications Fall and the FED Delivers Stability

Mortgage rates fell for the 1st time in 3-weeks in the week ending 26th March, with the downside coming from FED support.

Despite the continued spread of the coronavirus across the U.S and risk aversion, 30-year fixed rates had risen ahead of last week’s pullback.

Over the previous 2-weeks, lenders had raised rates to combat a surge in applications. Freddie Mac had reported a fall in demand going into last week, however, which allowed lenders to lower rates.

Adding to the downside was the FED’s unlimited bond purchasing program. This includes the purchasing of mortgage-backed securities.

Compared to this time last year, 30-year fixed rates were down by 56 basis points.

30-year fixed rates were also down by 144 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data took a back seat once more in through the 1st half of the week. The data was particularly dire, however, with private sector PMI and labor market figures painting a grim picture.

According to the March prelim private sector PMIs, the Composite and Services Sector PMI fell to all-time lows. Things were not much better for the manufacturing sector, with the PMI falling to a 127-month low.

Labor market numbers were no better, with initial jobless claims surging by 3.283m, also a series record.

It was ultimately the passing of the U.S Stimulus Bill, alongside the FED’s support, that delivered support to riskier assets.

Freddie Mac Rates

The weekly average rates for new mortgages as of 26th March were quoted by Freddie Mac to be:

  • 30-year fixed rates fell by 15 basis points to 3.50% in the week. Rates were down from 4.06% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed fell by 14 basis points 2.92% in the week. Rates were down from 3.57% compared with a year ago. The average fee fell from 0.7 to 0.6 points.
  • 5-year fixed rates surged by 23 basis points to 3.34% in the week. Rates were down by 41 points from last year’s 3.75%. The average fee increased from 0.2 to 0.3 points.

According to Freddie Mac, the FED’s swift and significant efforts to stabilize the markets delivered the downside in the week.

Similar to other segments of the economy, Freddie Mac also noted that demand is softening. Freddie Mac expects the combined effect of FED action and fiscal stimulus to provide substantial support to the mortgage markets, however.

Mortgage Bankers’ Association Rates

For the week ending 20th March, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.71% to 3.69. Points increased from 0.28 to 0.43 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances increased from 3.74% to 3.82%. Points decreased from 0.37 to 0.35 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances rose from 3.77% to 3.84%. Points rose from 0.32 to 0.35 (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, tumbled by 29.4% in the week ending 20th March. In the previous week, the Index had fallen by 8.4%.

The Refinance Index slumped by 34% from the previous week and was 195% than the same week a year ago. In the previous week, the index had fallen by 10%.

The refinance share of mortgage activity decreased from 74.5% to 69.3% in the week ending 20th March. In the prior week, the share had fallen from 76.5% to 74.5%.

According to the MBA:

  • 30-year fixed mortgage rates had reached its highest level since mid-January last week. This was despite Treasury yields sitting at relatively low levels.
  • Secondary market volatility and lenders grappled with capacity issues and backlogs and staff working remotely contributed to the rise.
  • Higher rates led to the slide in refinance activity.
  • FED action to restore liquidity and stability, however, could put downward pressure on mortgage rates.
  • The MBA noted that the rise in rates impacted home purchase applications, as did widespread economic disruption and uncertainty over what lies ahead.
  • Notably, purchase applications were down 11% compared to a year ago. This was the first year-on-year decline in over 3-months.

For the week ahead

It’s another relatively busy 1st half of the week for the Greenback.

Key stats in the week include March consumer confidence figures due out on Tuesday and ISM Manufacturing PMIs on Wednesday.

Following last week’s initial jobless claims figures, the markets may be somewhat numb to labor market figures this week.

ADP nonfarm employment change figures for March are due out on Wednesday, with the weekly initial jobless claims on Thursday.

We could see another jump in the weekly jobless claims, as the shutdown across the U.S continued…

From the housing sector, February pending home sales figures and January house price figures should have a muted impact.

Outside of the numbers, expect coronavirus news updates and chatter from Capitol Hill to remain the key drivers in the week.

U.S Mortgage Rates Surge Again as Lenders Look to Tank Demand

Mortgage rates continued to defy gravity in the week ending 19th March, with 30-year fixed rates rising for a 2nd consecutive week.

Despite the continued spread of the coronavirus across the U.S and risk aversion, 30-year fixed rates surged by 29 basis points to 3.65%.

The upside in the week was attributed to a lack of capacity to meet an even greater surge in demand for new mortgages and refinance applications. Lenders cranked up lending rates in yet another bid to curb applications.

Shutdowns in various parts of the country would certainly not have helped with the capacity issues lenders have faced.

Compared to this time last year, 30-year fixed rates were down by 63 basis points.

30-year fixed rates were down by 129 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data took a back seat once more in through the 1st half of the week. Government steps to combat the spread and economic impact of the coronavirus on the U.S economy remained the key driver.

While the stats took a back seat, a jump in the U.S initial jobless claims to 287k and slide into contraction in NY State and Philly manufacturing sectors were negatives.

The Philly FED Manufacturing Index tumbled from 36.7 to -12.7 in March, with the NY Empire State Manufacturing Index falling from 12.9 to -21.5.

We are expecting the stats to begin to have a greater impact in the coming weeks, now that the government and the FED are active.

Outside of the numbers, the FED shocked the global financial markets at the start of the week. The FED slashed rates to zero while delivering $700bn in QE to combat the effects of the coronavirus. The surprise moved led to a tumble in riskier assets at the start of the week.

Freddie Mac Rates

The weekly average rates for new mortgages as of 19th March were quoted by Freddie Mac to be:

  • 30-year fixed rates jumped by 29 basis points to 3.65% in the week. Rates were down from 4.28% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed also surged by 29 basis points 3.06% in the week. Rates were down from 3.71% compared with a year ago. The average fee held steady at 0.7 points.
  • 5-year fixed rates increased by 10 basis points to 3.11% in the week. Rates were down by 73 points from last year’s 3.84%. The average fee remained unchanged at 0.2 points.

According to Freddie Mac, lenders increased prices to help manage skyrocketing refinance demand. With lenders working their way through backlogs, this is expected to be a short-term spike in rates.

On the purchase front, daily loan applications had been on the rise since mid-February before starting to decline late last week.

Mortgage Bankers’ Association Rates

For the week ending 13th March, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, increased from 3.57% to 3.71. Points increased from 0.25 to 0.28 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances increased from 3.47% to 3.74%. Points increased from 0.27 to 0.37 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances rose from 3.58% to 3.77%. Points rose from 0.20 to 0.32 (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, fell by 8.4% on the week ending 13th March. In the previous week, the Index had jumped by 55.4% to its highest level since Apr-09.

The Refinance Index slid by 10% from the previous week and was 402% higher than the same week a year ago. In the previous week, the Index had surged by 79% to its highest level since Apr-09.

The refinance share of mortgage activity fell from 76.5% to 74.5% in the week ending 13th March. In the week prior, the refinance share had increased from 66.2% to 76.5%.

According to the MBA:

  • The ongoing situation around the coronavirus led to further stress in the financial markets.
  • This led to unprecedented volatility and widening spreads, which drove mortgage rates back to their highest level since mid-February.
  • Rising mortgage rates contributed to the decline in refinance applications.
  • Refinance activity remains very high, however.
  • The FED rate cut and other monetary policy measures to help the economy should bring down mortgage rates in the coming weeks.
  • This should, in turn, fuel further demand for refinances, particularly with households looking to increase disposable income and savings.
  • For purchase activity, while up by 10% from a year ago, a gloomier outlook could pin back activity near-term.

For the week ahead

It’s relatively busy 1st half of the week for the Greenback.

Prelim March private sector PMI numbers are due out on Tuesday, which will have a material influence on risk appetite.

On Wednesday, durable goods orders for February and the weekly jobless claims figures on Thursday will also provide direction.

Outside of the stats, updates on the coronavirus and how successful the U.S government has been to contain the spread will be key.

Stricter measures to contain the spread could lead to a more negative outlook towards the economy, which would support a pullback in mortgage rates.

Much will depend on whether Lenders have worked through the backlog. Freddie Mac had noted that applications were falling over the last week, which should have helped…

U.S Mortgage Rates as Lenders Look to Curb Demand

Mortgage rates defied gravity in the week ending 12th March, with 30-year fixed rates rising for the 1st time in 3-weeks.

Despite the continued global spread of the coronavirus, 30-year fixed rates increased by 6 basis points to 3.36%.

The upside in the week was attributed to a lack of lender capacity to meet a surge in demand for new mortgages and refinance applications. In an attempt to ease demand, lenders increased rates in a bid to curb applications.

While rates were on the rise in the week, 30-year fixed rates have fallen 95 basis points, year-on-year.

30-year fixed rates were also down by 158 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

It was a quiet 1st half of the week on the economic data front. Key stats included February inflation figures and weekly jobless claims numbers.

The stats had a muted impact on U.S Treasury yields, however, with U.S President Trump’s national address overnight on Wednesday spooking the markets.

At the start of the week, things had not been much better, with the virus making its presence known in the West. The spread led to the WHO raising its classification to a pandemic.

Risk aversion drove demand for U.S Treasuries in the 1st half of the week that would have normally weighed on mortgage rates.

Freddie Mac Rates

The weekly average rates for new mortgages as of 12th March were quoted by Freddie Mac to be:

  • 30-year fixed rates rose by 7 basis points to 3.36% in the week. Rates were down from 4.31% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed fell by 2 basis points 2.77% in the week. Rates were down from 3.76% compared with a year ago. The average fee held steady at 0.7 points.
  • 5-year fixed rates slid by 17 basis points to 3.01% in the week. Rates were down by 83 points from last year’s 3.84%. The average fee remained unchanged at 0.2 points.

According to Freddie Mac, refinance applications continued to surge, while 30-year fixed mortgage rates ticked up from last week’s historical low.

By historical standards, mortgage rates remained at extraordinary levels. Many home buyers considered refinancing options to increase disposable incomes.

Mortgage Bankers’ Association Rates

For the week ending 6th March, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.74% to 3.57. Points remained unchanged at 0.25 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances slid from 3.57% to 3.47%, the lowest level since Dec-2012. 3.47% was also the lowest level in survey history. Points increased from 0.26 to 0.27 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances fell from 3.63% to a series low 3.58%. Points decreased from 0.21 to 0.20 (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, jumped by 55.4% to its highest level since Apr-09 in the week ending 6th March. In the week ending 28th February, the Index had risen by 15.1%.

The Refinance Index surged by 79% from the previous week to its highest level since Apr-09 and was 479% higher than the same week a year ago. In the previous week, the index had jumped by 26%.

The refinance share of mortgage activity increased from 66.2% to 76.5% in the week ending 6th March. In the week prior, the refinance share had risen from 60.8% to 66.2%.

According to the MBA, market uncertainty surrounding the coronavirus led to a considerable drop in U.S Treasury rates. The slide in yields caused 30-year fixed rates to fall to match its December 2012 survey low of 3.47%.

The slide in rates led to a surge in both refinancing and new mortgage applications. The refinance index saw its largest weekly increase since Nov-2008.

Taking into account the current economic situation and how much rates have fallen, MBA almost doubled its 2020 refinance originations forecast to $1.2tn. That’s a 37% increase from 2019 and the strongest refinance volume since 2012.

For the week ahead

It’s relatively busy 1st half of the week for the Greenback.

Key stats include NY Empire State Manufacturing figures for March, due out on Monday and February retail sales figures due out on Tuesday.

Barring dire numbers, we would expect February industrial production and business inventories to have a muted impact on Tuesday.

On Wednesday, building permits and housing start numbers for February will also be brushed aside. The FOMC interest rate decision is the main event of the week on Wednesday. With the markets expecting a 2nd rate cut, the FOMC economic projections will have the greatest impact. It will be the first time that the FED will be in a position to quantify the impact of the virus on the U.S economy…

Combined with monetary policy, the U.S administration called a national emergency last Friday. The markets will be watching closely to assess the timelines for a rollout to counter the impact of the coronavirus.

While both monetary and fiscal support are of significant influence, containment remains the key near-term…

From elsewhere, China’s industrial production and retail sales figures for February will also be in focus on Monday.

U.S Mortgage Rates Fall to Record Lows. The Year of Record Breaking May Well Continue

Mortgage rates fell for a 2nd consecutive week in the week ending 5th March, marking the 5th week in the red out of 7.

The weekly decline saw mortgage rates fall to the lowest level in its almost 50-year history.

Market risk aversion stemming from the ever-widening spread of the coronavirus did the damage in the week, as the FED delivered an emergency rate cut on Tuesday.

Compared to this time last year, 30-year fixed rates were down by 112 basis points.

30-year fixed rates were also down by 165 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

It was a busy 1st half of the week on the economic data front. Key stats included the markets preferred ISM Manufacturing and Non-Manufacturing PMI numbers for February.

Following some dire Markit survey-based figures from the previous week, the all-important non-manufacturing PMI impressed, but not enough to prevent a Dollar rout.

On Tuesday, the FED delivered an emergency 50 bps rate cut, with the spread of the coronavirus in the U.S painting a dim outlook.

The markets are expecting a 2nd rate cut later in the month, largely because a single rate cut could have waited until the FOMC meeting.

Fiscal policy support may also be on its way… It may not be enough, however. The U.S government will not be able to contain the virus and that was a major concern in the week.

Freddie Mac Rates

The weekly average rates for new mortgages as of 5th March were quoted by Freddie Mac to be:

  • 30-year fixed rates slid by 16 basis points to 3.29% in the week. Rates were down from 4.41% from a year ago. The average fee remained unchanged at 0.7 points.
  • 15-year fixed also slid by 16 basis points 2.79% in the week. Rates were down from 3.83% compared with a year ago. The average fee fell from 0.8 to 0.7 points.
  • 5-year fixed rates decreased by 2 basis points to 3.18% in the week. Rates were down by 69 points from last year’s 3.87%. The average fee remained unchanged at 0.2 points.

According to Freddie Mac, mortgage rates hit a record 3.29% in the week, the lowest level in its nearly 50-year history. While rates were on the slide, mortgage applications jumped by 10% in the last week from 1-year ago, with no signs of slowing down.

Given these strong indicators in rates and sales, as well as the recent jump in new construction, Freddie Mac sees the housing market continue to be a positive influence for the broader economy.

Mortgage Bankers’ Association Rates

For the week ending 28th February, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 3.84% to 3.74. Points decreased from 0.26 to 0.25 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances slid from 3.73% to 3.57%. Points decreased from 0.27 to 0.26 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances remained unchanged at 3.72%. Points decreased from 0.23 to 0.20 (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, surged 15.1% in the week ending 28th February. In the week ending 21st February, the Index had increased by 1.5%.

The Refinance Index jumped 26% from the previous week and was 224% higher than the same week a year ago. In the previous week, the Index had fallen 1%

The refinance share of mortgage activity increased from 60.8% to 66.2% in the week ending 28th February. In the week prior, the refinance share had decreased from 63.2% to 60.8%.

According to the MBA, fixed mortgage rates fell to their lowest level in more than 7-years. Negative sentiment towards the economic impact from the spread of the coronavirus did the damage.

The MBA added that, given the further drop in Treasury yields this week, refinance activity will increase even more until fears subside and rates stabilize.

With the real estate market now entering the spring homebuying season, the next few weeks are key…

An extended period of economic uncertainty could leave home shoppers on the side-lines near-term.

For the week ahead

It’s quiet 1st half of the week for the Greenback.

Key stats include February inflation figures due out on Wednesday and Thursday. While consumer prices are of interest, the markets may be more interested in wholesale inflationary pressures…

From late last week, nonfarm payrolls and wage growth eased immediate concerns over the economy, though February numbers are of little comfort.

Expectations are for the FED to deliver another 50 bps rate cut later this month, which will leave Treasuries yields on the back foot.

Barring the announcement of a cure or the discovery of a successful treatment drug that has ample supply, there’s not too much that can change the narrative near-term.

All of this suggests further downside to mortgage rates. It could mean a slide in demand to boot, however, which would come at a bad time for the U.S economy.

From elsewhere, trade data out of China over the weekend will set the tone at the start of the week.