U.S Mortgages – Down 3-weeks in a Row as Trade Hits Risk Appetite

Mortgage rates fell for a 3rd consecutive week in the week ending 5th July, with the downward trend seeing rates now down in five of the last six weeks, according to figures released by Freddie Mac.

The fall in rates to levels not seen since mid-April, came off the back of market jitters over trade, as U.S President Trump looks to deliver the U.S with fairer trade terms in support of the U.S economy.

A material shift in risk appetite in recent weeks continued to see buying demand for U.S Treasuries, driving yields lower, which ultimately pinned back mortgage rates, halting the upward momentum seen through the early part of the 2nd quarter and most of the current year.

While the slide in rates will have provided much relief to prospective home buyers and those looking to refinance existing mortgages, the reality remains that rates are still well above levels seen late last year and, more importantly, the window of opportunity to take advantage of the current downward trajectory may well be narrowing and all for the wrong reasons.

Under normal conditions, a downward trend in mortgage rates would be well received, but when attributed to a negative outlook towards the U.S and global economy, there may be trouble ahead for prospective home buyers looking to get on the property ladder or upgrade.

The ongoing trade war is unlikely to protect the U.S economy and the U.S manufacturing sector for that matter and, with June’s wage growth figures failing to impress, following some impressive June ISM and Markit private sector PMI numbers released through the week, the FED’s cautious stance on the possible impact of a trade war on the U.S and global economy seems well justified.

It’s not all bad if wage growth lacks momentum, but with inflationary pressures continuing to build, the current downward trend in mortgage rates is likely to provide temporary relief at best, with any resolution to the current trade spat between China and the U.S likely to see the markets jump back into riskier assets at the expense of U.S Treasuries that would see mortgage rates back up to year highs.

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

  • 30-year fixed rate loan decreased from 4.55% to 4.52% in the week, while up from 3.96% a year ago.
  • 15-year fixed rates fell from 4.04% to 3.99% in the week, while up from 3.22% from a year ago.
  • 5-year fixed rates slid from 3.87% to 3.74% over the week, while up from last year’s 3.21%.

Mortgage Bankers’ Association Rates for the week ending 29th June were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA decreased from 4.81% to 4.78%.
  • Average interest rate for 30-year fixed with conforming loan balances decreased from 4.84% to 4.79%.
  • Average 30-year rates for jumbo loan balances bucked the trend, rising from 4.70% to 4.71%.

Weekly figures released by the Mortgage bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, fall by just 0.5%, following the previous week’s 4.9% fall week-on-week.

The Refinance Index fell by 2% in the week ending 29th June, partially reversing the previous week’s 4% slide, with the refinance share of mortgages falling from 37.6% to 37.2%, the fall in the share of refinance mortgages resuming through the week.

For the week ahead, it’s a relatively quiet week on the data front, leaving June inflation figures due out of the U.S on Thursday as the key driver for mortgage rates through the week, though it’s ultimately going to boil down to market risk appetite and demand for U.S Treasuries, which will be hinged on the ongoing trade war and much less to do with any upbeat economic indicators.

We’ve seen the global financial markets be far more responsive to weak economic indicators of late than upbeat data, reinforcing the general view that trade wars are bad and will likely hurt, not only the economies of those in the midst of the trade war, but those in the periphery.

It remains to be seen whether the downward momentum in U.S mortgage rates can continue. The reality for those looking for a mortgage is the fact that labour market conditions and the U.S economy may actually begin to show some weakness in the event of an extended trade war, which would offset any benefit of falling mortgage rates to those looking to purchase or refinance.

The numbers may be small today, but with inflation on an upward trend, mortgage rates much higher than a year ago and wage growth positive, but not inspiring, disposable incomes could tighten in the coming months and lenders will be conscious of current delinquency rates and an eagerness to avoid falling back into the abyss.

U.S Mortgage Rates – Down Again and it’s All Thanks to Trump

Mortgage rates were on the decline once more through the week ending 28th June, with rates now having fallen in four of the last five weeks, according to figures released by Freddie Mac.

While the recent reversal in mortgage rates will be relief for some, the continued supply issue faced in the housing sector continues to push house prices northwards, though expectations are for the housing sector to begin hitting a soft patch, with the upward momentum in mortgage rates over the last 12-months likely to weigh on demand over the near-term.

Through the week, housing sector data released out of the U.S included May new home sales and pending home sales figures.

While new home sales surged by 6.7% in May, more than reversing the 3.7% slide in April, pending home sales fell by 0.5%, following a 1.3% fall in April, sending some mixed signals, as home owners hold on to existing homes in the wake of rising mortgage rates through the first 5-months of the year.

While inventories remain a concern, a 5% jump in housing starts back in May will provide some relief for prospective home owners, though unlikely to be enough to materially rebalance the sector through the summer, though whether demand is sustainable at current levels remains to be seen, the recent reversal in mortgage rates certainly a near-term positive for the sector.

The decline in mortgage rates came off the back of falling U.S Treasury yields as trade war jitters continued to rile the global financial markets, with economic data out of the U.S and FOMC member commentary raising some concern over U.S economic growth prospects for the 2nd half of the year.

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

  • 30-year fixed rate loan decreased from 4.57% to 4.55% in the week, while up from 3.88% a year ago.
  • 15-year fixed rates remained unchanged at 4.04% last week, while up from 3.17% from a year ago.
  • 5-year fixed rates rose from 3.83% to 3.87% over the week, while up from last year’s 3.17%.

Mortgage Bankers’ Association Rates for the week ending 22nd June were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA decreased from 4.82% to 4.81%.
  • Average interest rate for 30-year fixed with conforming loan balances increased from 4.83% to 4.84%.
  • Average 30-year rates for jumbo loan balances decreased from 4.79% to 4.70%.

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 4.9%, following the previous week’s 5.1% rise week-on-week.

The Refinance Index fell by 4% in the week ending 22nd June, partially reversing the previous week’s 6% surge, with the refinance share of mortgages rising from 36.8% to 37.6%, reversing the recent fall in the share of refinance mortgages.

Economic data through the week ahead is on the heavier side, with key stats including the market’s preferred ISM private sector manufacturing PMI numbers and the all-important June nonfarm payroll and wage growth figures.

Following softer than expected finalized 1st quarter GDP numbers last week, the markets will be looking for momentum in the U.S economy at the end of the 2nd quarter, any softer numbers likely to see demand for U.S Treasuries on the rise that would support a further decline in U.S mortgage rates through the week.

Outside of the data, FOMC member commentary, the release of the FOMC minutes and noise from the Oval Office will likely be the key drivers through to Friday’s labour market figures, with trade tariffs scheduled to be imposed by both the U.S and China on 6th July.

It’s been a rough ride for consumers, with consumer confidence easing in June off the back of the trade war chatter, with a slowdown in manufacturing having already been evident ahead of the June Chicago PMI that had been released last Friday.

We would certainly expect the housing sector to get a little nervous if the June ISM private sector PMI numbers disappoint ahead of Friday’s wage growth and nonfarm payroll numbers and, with a number of FOMC members having already called the 2nd quarter as the tail end of the economic growth cycle and while mortgage rates may have peaked as a result, demand may become a negative for the sector should the FOMC doves be correct.

U.S Mortgage Rates – Trade Tariffs Send Mortgage Rates in Reverse

Mortgage rates eased back through the week ending 21st June, with the rates appearing to have steadied in recent weeks, following a sharp upward move in the first half of the year, with mortgage rates now having eased in 3 of the last 4-weeks.

A spike in demand for the safe havens saw investors piling into U.S Treasuries, leading to a pullback in yields over fears of a full blown trade war between the U.S and China, with the EU and other nations being drawn in.

Housing sector data out of the U.S through the last week included May’s building permit and housing start numbers, along with existing home sales. While building permits slid by 4.6% in May, housing starts rose by 5%, suggesting some inventory support near-term, though rising costs of raw materials supports the continued fall in building permits that has added pressure on inventory numbers and mortgage application volumes alongside rising mortgage rates.

Data elsewhere that also had an influence on yields included June’s Philly FED Manufacturing PMI, which saw a material decline, with new export orders weighing, providing the markets with further evidence of a fall in global trade terms amidst the current trade spat.

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

  • 30-year fixed rate loan decreased from 4.62% to 4.57% in the week, while up from 3.90% a year ago.
  • 15-year fixed rates fell from 4.07% to 4.04% last week, while up from 3.17% from a year ago.
  • 5-year fixed rates held steady at 3.83% over the week, while up from last year’s 3.14%.

Mortgage Bankers’ Association Rates for the week ending 20th June were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA decreased from 4.83% to 4.82%.
  • Average interest rate for 30-year fixed with conforming loan balances remained unchanged at 4.83%.
  • Average 30-year rates for jumbo loan balances increased from 4.74% to 4.79%.

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 5.1%, following the previous week’s 1.5% fall week-on-week. The jump coming off the back of a downward trend over the last 4-weeks.

The Refinance Index surged by 6% in the week ending 15th June, more than reversing the previous week’s 2% fall, with the refinance share of mortgages rising from 35.6% to 36.8%, reversing the recent fall in the share of refinance mortgages.

Economic data through the week ahead is on the heavier side and will have some influence on market risk appetite, with key stats including June’s CB Consumer Confidence Index numbers on Tuesday, May durable goods orders, pending home sales and trade data on Wednesday, finalised 1st quarter GDP numbers on Thursday and then the FED’s preferred Core PCE Price Index and personal spending figures on Friday.

While solid numbers and an uptick in inflation would support a pickup in Treasury yields, trade war chatter will continue to be the focal point for the markets, with a continued retaliation by the U.S, the EU and China likely to lead to further spikes in demand for U.S Treasuries that would pin back mortgage rates further.

From the housing sector, May’s new home sales and pending home sales will be an area of interest in the wake of the upward trend in mortgage rates, as will FOMC member commentary, with members Bostic, Kaplan. Rosengren and Bullard scheduled to speak through the week, though how much influence will likely be determined by the level of noise from the Oval Office through the week.

For prospective home owners, the latest delinquency rates would be considered a positive, through rising borrowing costs and falling inventories continue to be a near-term risk for the broader housing sector, the bigger challenge being inventories as wage growth managed to find its feet through the current year, just in time for the pickup in mortgage rates.

U.S Mortgage Rates – Upward Trend Resumes

Mortgage rates were on the rise again in the week ending 14th June, bringing to an end two consecutive weeks’ of decline, with rates rising to their second highest of the year in response to the FED’s 25 basis point rate hike on Wednesday and a mass of other key drivers including rising prospects of a global trade war.

According to Freddie Mac, the effects of the FED’s current monetary policy cycle is expected to have lesser impact on home buyers and owners however, with a smaller portion of mortgage loans being pegged to short-term interest rate movements. According to Freddie Mac, the adjustable mortgage rate (ARM) share of outstanding loans is significantly smaller, down from 31% in the last FED rate hike cycle to just 8% in the current one.

While short-term rates may have less of an impact, inflationary pressures have been building and when combined with rising mortgage rates and rising house prices, wage growth is going to need to catch up for the housing sector to continue to see rising house prices driven by an under supply – over-demand dynamic.

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

  • 30-year fixed rate loan increased from 4.54% to 4.62% in the week, while up from 3.91% a year ago.
  • 15-year fixed rates rose from 4.01% to 4.07% last week, while up from 3.18% from a year ago.
  • 5-year fixed rates jumped from 3.74% to 3.83% over the week, while up from last year’s 3.15%.

Mortgage Bankers’ Association Rates for the week ending 13th June were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA increased from 4.77% to 4.83%.
  • Average interest rate for 30-year fixed with conforming loan balances rose from 4.75% to 4.83%.
  • Average 30-year rates for jumbo loan balances increased from 4.70% to 4.74%.

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 1.5%, following the previous week’s 4.1% rise week-on-week. The fall coming in spite of a second consecutive week of falling rates to the week ending 8th June.

The Refinance Index also fell, down 2% in the week ending 8th June, partially reversing the previous week’s 4% rise, with the refinance share of mortgages remaining unchanged at 35.6%, the recent downward trend in refinance rates resuming.

The Mortgage Bankers’ Association also released its first quarter mortgage delinquency report on Thursday, with delinquency rates for commercial and multifamily mortgage loans remaining relatively flat through the 1st quarter, sitting at or close to all-time lows, supported by the relatively low mortgage rate environment, a positive economic outlook, rising house prices and an ever tightening labour market conditions.

Based on unpaid principal balance (UPB) of loans, delinquency rates for the quarter ending 31st March 2018 were as follows:

  • Banks and thrifts (90 or more days delinquent or in non-accrual): 0.51%, unchanged from the quarter ending 31st December 2017.
  • Life company portfolios (60 or more days delinquent): 0.02%, down 0.01 percentage points from the quarter ending 31st December 2017.
  • Fannie Mae (60 or more days delinquent): 0.13%, a 0.02 percentage point increase from the quarter ending 31st December 2017.
  • Freddie Mac (60 or more days delinquent): 0.02%, unchanged from the 4th quarter of last year.
  • CMBS (30 or more days delinquent or in REO): 3.93%, a 0.15 percentage point fall from the 4th quarter of last year.

While mortgage credit remained widely readily available, supported by the current economic environment and labour market conditions and low delinquency rates, supply continues to be an issue with new home sales reaching the lowest level since December 2017 in May according the MBA, with unadjusted figures showing a 4.8% fall in May, month-on-month. Year-on-year, new home sales were estimated to have fallen by more than 5%.

For the week ahead, stats out of the U.S are on the quieter side, with key economic data including new home sales, existing home sales and building permits and housing starts figures for May, which will provide further insight into the current supply-demand imbalance that has continued to favour home owners.

While other stats through the week include prelim June private sector PMI numbers, the Philly FED Manufacturing PMI for July and the weekly jobless claims figures, FOMC member chatter through the week will likely be of greater influence alongside noise from the Oval Office.

FOMC Members Dudley, Duke, Bostic, Williams, Bullard are all scheduled to speak in the week, ahead of FED Chair Powell’s speech on Wednesday, the FED having pencilled in an additional rate hike to make it a projected 2 hikes through the 2nd half of the year.

With FOMC members likely to be sharing their outlook on policy for the remainder of the year, trade wars are also likely to take centre stage for the financial markets, with any retaliation by China and / or the EU likely to see U.S Treasury yields spike, which would provide further upward pressure to mortgage rates in the week ahead.

U.S Mortgage Rates Down Again as Applications Rebound

Mortgage rates fell for a 2nd consecutive week in the week ending 7th June, which supported a bounce in the number of mortgage purchases.

In spite of continuingly strong demand, attributed to a constraint in inventories, growth rate of purchase loan balances have eased through the first half of the year and more so since March, with the pace of house price rises and the upward trend in mortgage rates impacting.

For now, the good news is that labour market conditions continue to improve, with wage growth also on the rise, though wage growth may not be able to keep up with the upward momentum in house prices should there not be an inventory build-up through the summer.

Economic data released through the week included May’s ISM service sector PMI, which impressed, providing further evidence of a pickup in economic activity through the second quarter, while U.S factory orders dipped in April, according to figures released at the start of the week.

With data on the lighter side, U.S Treasury yields were in the hands of the Oval Office through the week, with the markets looking ahead to the G7 Summit on Friday and Saturday, market fears of a trade war driving demand for U.S Treasuries that led to a pullback in yields, easing pressure on mortgage rates.

Adding to the demand for U.S Treasuries was concern over the newly voted in Italian coalition government that is expected to begin ruffling the EU’s feathers with its populist policies that defy Brussels and the Establishment.

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

  • 30-year fixed rate loan slipped from 4.56% to 4.54% last week, while up from 3.89% a year ago.
  • 15-year fixed rates fell from 4.06% to 4.01% last week, while up from 3.16% from a year ago.
  • 5-year fixed rates fell from 3.80% to 3.74% over the week, while up from last year’s 3.11%.

Mortgage Bankers’ Association Rates for the week ending 6th June were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA fell from 4.85% to 4.77%, easing further from 23rd May’s 7-year high.
  • Average interest rate for 30-year fixed with conforming loan balances rose slipped from 4.84% to 4.75%.
  • Average 30-year rates for jumbo loan balances decreased from 4.73% to 4.70%.

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 4.1%, following the previous week’s 2.9% fall week-on-week. The rise coming off the back of slide in mortgage rates in the week ending 30th May.

The Refinance Index also rose, up 4% to recover from its lowest level since Dec-2000 in the week ending 30th May, following the previous week’s 4% fall, with the refinance share of mortgages rising from 35.3% to 35.6%, the recent downward trend hitting the brakes.

For the week ahead, updates from the G7 Summit will certainly have an impact on demand for U.S Treasuries and ultimately mortgage rates, with any increased risk aversion likely to see yields fall further back, Trump’s desire for a trade war a negative, not only bad for the Chinese and U.S economies, but the global economy in general.

On the data front, U.S May inflation numbers on Tuesday, the FOMC’s release of the economic projections, statement and anticipated rate hike on Wednesday evening, retail sales figures on Thursday and June consumer sentiment numbers on Friday will influence.

With a June rate hike largely priced in, key will be the economic projections and the FOMC’s tone, with any suggestions of a more aggressive rate path through the second half of the year, likely to lead to a bond rout that would see yields and mortgage rates rebound.

How responsive the markets will be to the FED and the stats will ultimately boil down to the noise from the Oval Office and from Italy however, with the North Korea – U.S Summit also scheduled to take place in the coming week adding to the geo-political risk that has riled the markets of late

Retaliatory action by G7 members and China, in response to current steel and aluminium and any additional trade tariffs would certainly put the markets into a ‘risk-off’ frenzy and, while this may be a good thing for mortgage rates over the near-term, any threat of a disruption to the U.S and global economies is never a good thing, particularly for prospective home buyers.

U.S Mortgage Rates Take a Breather

There was some respite for prospective home buyers last week, with mortgage rates easing back from May 2011 highs, 30-year fixed mortgage rates sliding by 10 basis points to 4.56% according to figures released by Freddie Mac.

Treasury yields continued to see volatility stemming from sentiment towards the U.S economy and FED monetary policy, coupled with trade war jitters and geo-political risk in Europe.

Economic data released last week included the FED’s referred Core PCE Price Index figures for April, which saw the annual rate of core inflation hold at 1.8%, easing concerns of a more aggressive rate path for the year, though the latest FOMC meeting minutes had talked of a willingness to allow inflation to overshoot the 2% target for a short period of time, adding further downward pressure on yields.

While inflation figures were steady, there was some good news on the labour market front at the end of the week, with wage growth rising at a quicker pace in May and labour market conditions tightening further, the U.S unemployment rate falling to 3.8%.

The uptick in wage growth was certainly timely considering the upward trend in mortgage rates and will offset some of the cost impact of rising mortgage rates on disposable incomes, though continued demand for homes will weigh on inventories to drive house prices further northwards.

Whilst the market panic over inflation and FED policy abated through the week, Italian and Spanish politics took centre stage, with the 5 Star- League coalition eventually forming government after a start of the week hiccup that roiled the global financial markets. The week ended with Spanish Prime Minister Rajoy being ousted in a vote of no confidence that takes two of the Eurozone’s larger economies into a period of uncertainty that will continue to drive volatility in the bond markets that ultimately impact mortgage rates.

Adding to the geo-political risk that has contributed to the direction of mortgage rates through the year, is U.S – China trade talks over the weekend and the U.S – North Korea Summit. The green light for the Summit on 12th June was the good news, while Trump’s apparent desire to wage a trade war with China and any other economy unwilling to cede to U.S demands was the negative. How talks progress through the weekend will influence yields and mortgage rates in the week ahead.

Freddie Mac weekly average rates for new mortgages as of 31st May were quoted to be:

  • 30-year fixed rate loan slipped from 4.66% to 4.56% last week, while up from 3.94% a year ago.
  • 15-year fixed rates fell from 4.15% to 4.06% last week, while up from 3.19% from a year ago.
  • 5-year fixed rates fell from 3.87% to 3.80% over the week, while up from last year’s 3.11%.

Mortgage Bankers’ Association Rates for the week ending 30th May were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA fell from 4.90% to 4.85%, easing from the previous week’s May-11 high.
  • Average interest rate for 30-year fixed with conforming loan balances rose slipped from 4.86% to $4.84%.
  • Average 30-year rates for jumbo loan balances decreased from 4.81% to 4.73%.

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 2.9%, following the previous week’s 2.6% fall week-on-week. The fall coming off the back of jump in mortgage rates in the week ending 24th May, while supply continues to be an issue.

The Refinance Index also fell, down 5% to its lowest level since Dec-2000, following the previous week’s 4% fall, with the refinance share of mortgage activity falling further to 35.3% of total applications, the lowest level since August 2008 and down from the previous week’s 35.7%, as the downward trend continues.

For the week ahead, economic data out of the U.S includes May’s service sector PMI numbers, April factory orders, trade data and 1st quarter productivity and unit labour cost numbers. Barring any particularly dire numbers, focus through the week will likely remain on trade talks, North Korea and Europe, with market risk appetite through the week unlikely to be unhinged by the stats.

A positive outcome all round on trade talks could have an undesired effect on Treasury yields that may ultimately see mortgage rates recover some of last week’s losses, the upward trend in mortgage rates and downward trend in applications unlikely to ease anytime soon.

U.S Mortgage Rates Up Again, Making It 15 Weekly Rises this Year!

Mortgage rates were on the rise once more, with rates hitting 4.66%, the highest level since May 2011’s 4.71%, according to figures released by Freddie Mac, the upward trend reported to have been the most sustained rise in rates in over 40-years. According to Freddie Mac, rates have risen in 15 of the first 21 weeks of the current year, the share of weekly rises the highest since 1972.

The sustained rise in mortgage rates through the year will have contributed to the slump in U.S home sales, with new home sales falling by 1.5% in April, reversing March’s 2% rise and existing home sales sliding by 2.5%, more than reversing March’s 1.1% rise, according to figures released last week.

While inventories have been the main driver for the housing market, the current year’s upward trend in mortgage rates may well see existing home owners opt out of moving homes, the persistent rise in borrowing costs now a material factor in the decision making process, household disposable incomes likely to be impacted, as inflationary pressures also hit consumer prices.

Tight labour market conditions may provide support for those looking to climb onto the property ladder, even with as much as a 1% rise in mortgage rates over the last year, though with home owners with fixed mortgage rates likely to pull properties from the market, the combination of rising borrowing costs and rising house prices is likely to have started to cause some pain and was reflected in the latest mortgage application figures.

Freddie Mac weekly average rates for new mortgages as of 24th May were quoted to be:

  • 30-year fixed rate loan rose from 4.61% to 4.66% last week to the highest level since 5th May 2011, while up from 3.95% a year ago.
  • 15-year fixed rates jumped from 4.08% to 4.15% last week, while up from 3.19% from a year ago.
  • 5-year fixed rates rose from 3.82% to 3.87% over the week, while up from last year’s 3.07%.

Mortgage Bankers’ Association Rates for the week ending 11th May were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA jumped from 4.78% to 4.90%, hitting the highest level since May-11.
  • Average interest rate for 30-year fixed with conforming loan balances rose from 4.77% to $4.86%.
  • Average 30-year rates for jumbo loan balances rise from 4.73% to 4.81%, reaching its highest level since Sep-13.

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%, following the previous week’s 2.7% fall week-on-week. The fall coming off the back of the continued uptrend in mortgage rates, while supply will also have been an issue.

The Refinance Index also fell, down 4% to its lowest level since Dec-2000, following the previous week’s 4% fall, with the refinance share of mortgage activity falling further to 35.7% of total applications, the lowest level since 2008 and down from the previous week’s 35.9%, as the downward trend continues.

For the week ahead, U.S economic data including consumer confidence, 3rd estimate GDP numbers, personal spending, Core PCE Price Index figures, nonfarm payrolls and wage growth will be in focus, with positive numbers likely to drive mortgage rates up further through the week.

Consumer confidence, inflation and wage growth will certainly be relevant for the U.S housing sector and outlook for mortgage applications, a pickup in wage growth and relatively steady inflation expected to support demand for housing, though consumer confidence will need to remain at current levels, any concerns over the outlook for growth likely to weigh on both applications and mortgage rates through the week.

Good news for home owners was Trump’s talk of further tax cuts, though the wealthier are going to take a hit with a cut in tax relief from interest on home mortgages in the coming years hitting higher income earners, the tax reform bill reducing the amount that home owners will be able to deduct interest on from $1m of mortgage debt to $750 of mortgage debt.

Improved economic indicators continue to suggest that the upward trend in U.S mortgage rates will continue, though with geo-political risk becoming an ever present feature, there may be some respite in mortgage rates this coming week, with concerns over North Korea, a U.S – China trade war, Iran and NAFTA there for consideration.

U.S Mortgage Rates on the Move and It’s Going to Hurt

Mortgage rates were on the rise again, hitting 8-year highs in the week ending 17th May, following the previous week’s hold, with mortgage applications continuing to fall through mid-May, May’s month-on-month applications looking weak following the 5% fall in April.

While home owners have found support from the current economic environment that has contributed to the tight labour market environment, rising borrowing costs have been joined by rising energy prices, with gas prices hitting 4-year highs ahead of the peak season for home buyers.

A combination of strong demand and low inventories have seen the upward trend in mortgage rates have a limited impact on the housing sector to date, but with inflationary pressures building, mortgage rates on the rise and house prices also rising, the housing sector could be in for a surprise should rates continue to rise at pace seen through the first 5-months of the year, with mortgage rates heading towards the 5% range.

The resumption of the upward trend will bring into question affordability, particularly with energy prices and house prices on the rise, which could begin to weigh on the demand side and begin easing pressure on inventories, though a shortage of skilled labour and rising material costs continue to be an issue for the sector and new home builds.

According to figures released on Wednesday, U.S building permits slipped by 1.8% in April, while housing starts slumped by 3.7%, which suggests further upward pressure on house price near-term, house price appreciation outpacing the tepid wage growth seen across the labour market.

Freddie Mac weekly average rates for new mortgages as of 17th May were quoted to be:

  • 30-year fixed rate loan rose from 4.55% to 4.61% last week to the highest level since 19th May 2011, while up from 4.02% a year ago.
  • 15-year fixed rates jumped from 4.01% to 4.08% last week, while up from 3.27% from a year ago.
  • 5-year fixed rates rose from 3.77% to 3.82% over the week, while up from last year’s 3.13%.

Mortgage Bankers’ Association Rates for the week ending 11th May were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA fell from 4.80% to 4.78%, easing back from recent Jul-11 highs.
  • Average interest rate for 30-year fixed with conforming loan balances eased from 4.78% to $4.77%.
  • Average 30-year rates for jumbo loan balances rise from 4.55% to 4.73%.

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 2.7%, following the previous week’s 0.4% fall week-on-week. The fall coming off the back of the continued uptrend in mortgage rates and in spite of respite in the upward trend through the week ending 11th May.

The Refinance Index also fell, down 4% to its lowest level since Aug-08, following the previous week’s 1% fall, with the refinance share of mortgage activity falling further to 35.9% of total applications, the lowest level since Aug-08 and down from the previous week’s 36.3%, the downward trend continuing.

While mortgage applications have been on a downward trend, attributed to a combination of rising mortgage rates and shortage of housing inventories, delinquency rates have also been on a downward trend.

According to the MBA, the delinquency rate for mortgage loans on 1-4 unit residential properties fell to 4.63% of all loans outstanding in the 1st quarter of this year, down 54 basis points from the 4th quarter of 2017 and 8 basis points lower from the 1st quarter of last year.

The latest MBA report also showed that the percentage of loans in which foreclosure actions were started during the 1st quarter was 0.28%, up 3 basis points from the previous quarter, while down 2 basis points from 1st quarter of last year.

Favourable economic conditions, a low unemployment rate, tax refunds and bonuses and rising house prices contributing to the downward trend in delinquency rates.

While the numbers suggest that lending standards will remain steady, rising mortgage rates and rising house prices will offset some of the factors contributing to the downward trend, as reflected in the 1st quarter percentage of loans on which foreclosure action commenced.

Following 2-weeks of hope, rising energy prices, positive retail sales in April and some hawkish FOMC member commentary saw U.S 10-year Treasury yields hit 3.105%, the highest level since the summer of 2011, driving mortgage rates higher in the week.

While market focus on FOMC member chatter revolves around policy, FOMC voting member Kashkari on Thursday addressed the issue of asset prices and said that he didn’t see any signs of a housing bubble, a much needed positive for the housing sector and for those still looking to get onto the property ladder.

For the week ahead, it’s a particularly busy one on the economic calendar, with a number of FOMC members speaking through the week to provide forward guidance on policy, while the FOMC meeting minutes, May’s prelim private sector PMI, durable goods orders and home sales figures will also be in focus.

Hawkish minutes and FOMC member commentary would see yields on the move again, though we would expect geo-political risk to play a hand in the direction of Treasury yields through the week, NAFTA and U.S – China trade negotiations, U.S sanctions on Iran, the anti-Euro Italian government and North Korea there for the markets to contend with through the week.

U.S Mortgage Rates Hold Steady, While Applications Fall Again

While the rise in mortgage rates has pressured lower income household disposable incomes, a continued tightening in labor market conditions, an improvement in economic indicators and an easing in inflationary pressures remain positives for the housing sector ahead of peak buying season in the U.S.

Adding to the upside for the housing market remains weak inventory numbers, though the decline in mortgage applications in April in early May will be of some concern. While the upward trend in mortgage rates would have contributed to the fall in applications, slower new construction activity attributed to a shortage of skilled labor and rising material costs would have also been a factor.

Freddie Mac weekly average rates for new mortgages as of 10th May were quoted to be:

  • 30-year fixed rate loan was unchanged at 4.55% last week, while up from 4.05% a year ago.
  • 15-year fixed rates slipped from 4.03% to 4.01% last week, while up from 3.29% from a year ago.
  • 5-year fixed rates rose from 3.69% to 3.77% over the week, while up from last year’s 3.14%.

Mortgage Bankers’ Association Rates for the weekend ending 9th May were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA fell from 4.81% to 4.80%, sitting close to last week’s highest level since Jul-11.
  • The average interest rate for 30-year fixed with conforming loan balances eased from 4.80% to $4.78%.
  • Average 30-year rates for jumbo loan balances slipped from 4.69% to 4.65%.

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 0.4%, following the previous week’s 2.5% fall week-on-week. The fall coming off the back of the continued uptrend in mortgage rates.

The Refinance Index also fell, down 1%, following the previous week’s 4% fall, with the refinance share of mortgage activity falling further to 36.3% of total applications, the lowest level since Sep-08 and down from the previous week’s 36.5%, the downward trend continuing.

The MBA’s Builder Applications Survey for April, released on Thursday, showed that mortgage applications for new home purchases fell by 5% when compared with March 2018, while rising by 7.5% when compared with April 2017. The uptrend in mortgage rates through April, which contributed to a downward trend in the MBA’s Market Composite Index through April and early May, weighing on applications ahead of the peak home buying season.

In spite of applications falling, the MBA reported on Wednesday that mortgage credit availability was unchanged in April, according to the Mortgage Credit Availability Index (MCAI). The MCAI held steady at 177.9.

While the MCAI held steady, the Conventional MCAI increased by 1.9%, while the Government MCAI fell by 1.4%. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 4.4%, while the conforming MCAI fell by 0.9%.

The figures revealed that government credit tightened, while conventional credit availability improved in April, attributed to an expansion in jumbo credit.

The last 2-weeks would have given prospective buyers some respite, with softer than expected April inflation figures last week seeing 10-year Treasury yields ease back from 3%, though, with stats on the heavier side for the week ahead, yields could be on the move again. April retail sales figures due out on Tuesday will likely provide support, with U.S sanctions on Iran expected to continue to fuel oil prices, adding further inflationary pressures that should support an uptick in yields that would ultimately lead to a rise in mortgage rates.

For the week ahead, it’s not just the stats that will provide direction for U.S Treasuries and mortgage rates, with NAFTA talks, trade talks between the U.S and China, FOMC member speeches through the week and possible rising tension in the Middle East other factors to influence.

The U.S housing sector will also have April’s building permit and housing start figures released. Forecasted softer numbers are likely to add further pressure on inventories and mortgage applications, with the upswing in mortgage rates coinciding with an inventory shortage driven a rise in house prices, the combination forcing some home buyers out of the market while leading some to re-evaluate purchase prices and budgets.

For home buyers the fact that mortgage credit availability held steady will have been a positive, but when considering the fact that jump mortgage credit availability was behind the numbers, a tightening in credit availability for conforming loans suggests that lenders will have tightened credit lending conditions for lower-income families, with the outlook for mortgage rates likely to place further pressure on conforming credit availability.

U.S Mortgage Rates Pause, but Upward Trend Set to Continue

The recent upward trend in mortgage rates and a downward trend in applications has yet to show any signs of influencing the housing sector, with demand continuing to outstrip supply, supported by a continued tightening in the labor market, though another month of disappointing wage growth figures will be of concern.

Questions will likely begin to circulate on whether mortgage rates at current levels are going to impact the demand side, a softening in demand the near-term risk for the sector. Rising mortgage rates will certainly have an impact, particularly if wage growth doesn’t keep up with inflation.

Freddie Mac rates for new mortgages for the week ending 2nd May were quoted to be:

  • 30-year fixed rate loan eased from 4.58% to 4.55% last week, while up from 4.02% a year ago.
  • 15-year fixed rates rose from 4.02% to 4.03% last week, while up from 3.27% from a year ago.
  • 5-year fixed rates slipped from 3.74% to 3.69% over the week, while up from last year’s 3.13%.

Mortgage Bankers’ Association Rates for last week were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA increased from 4.71% to 4.81%, hitting the highest level since Jul-11.
  • The average interest rate for 30-year fixed with conforming loan balances rose from 4.73% to $4.80%, hitting the highest level since Sept-13.
  • Average 30-year rates for jumbo loan balances jumped from 4.64% to 4.69%, hitting the highest level since Sep-13.

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 2.5%, following the previous week’s 0.2% fall week-on-week. The fall coming off the back of the late April jump in mortgage rates, driven by a build-up in inflationary pressures.

The Refinance Index also fell, down 4%, following the previous week’s 0.3% fall, with the refinance share of mortgage activity falling further to 36.5% of total applications, the lowest level since Sep-08 and down from the previous week’s 37.2%, the downward trend continuing.

With loan rates hitting levels not seen since 2013, the fall in applications was certainly not a surprise, this week’s marginal decline in mortgage rates providing prospective homeowners with some respite but little relief from the moves over the last few months.

Economic data released through the week continued to support the sentiment towards a pickup in inflationary pressures that saw 10-year Treasury yields hit 3% to drive mortgage rates too late 2013 levels the previous week.

March’s core CPE price index rose by 1.9% year-on-year, providing further cause to expect a more hawkish FED and more aggressive rate path through the second half of the year, while weaker service sector activity going into the 2nd quarter and softer wage growth figures pinned back Treasury yields through the middle of the week. Wage growth will continue to be the area of focus near-term, the unemployment rate now down at 3.9%, soft wage growth reason for the FED to hold off talk of a more aggressive rate path.


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Adding to the downward pressure on 10-year Treasury yields was May’s FOMC Statement released on Wednesday, which held back from committing to a more aggressive rate path while acknowledging that inflation had moved towards the 2% objective.

10-year Treasury yields closed out the week at 2.95%, up 18 basis points over the last month, with April’s weak nonfarm payroll and wage growth figures providing little relief on sentiment towards monetary policy, which will continue to drive mortgage rates northwards.

The U.S administration’s lack of progress on trade talks with China will raise some concerns in the coming week, with economic data out of the U.S in the week ahead including April’s consumer price index numbers that will play a hand in yields through the week.

Negative chatter on trade could see Treasury yields pullback to provide some more respite, though Trump could take a softer stance on the basis that talks are planned to continue, the upward trend in yields expected to resume barring an economic meltdown.

The outlook on borrowing costs remains unchanged, the upward trend expected to add further pressure on disposable incomes in high debt households when factoring in the recent pickup in consumer prices.

Reducing debt levels would offset the upward trend in mortgage rates, with the continued tightening in the labor market expected to place further upward pressure on wages should economic conditions remain favorable, the combination of which will likely continue skewing the housing sector in favor of homeowners.

U.S Mortgage Rates Surge to 4-Year Highs

A jump in 10-year U.S Treasury yields to 3% off the back of a continued build-up of inflationary pressure from rising commodity prices and increasing expectations of a 4th rate hike for the year, saw 30-year fixed-rate mortgages jump 11 basis points to 4.58%, the highest level since August 2013

Economic data through the week eased concerns over the U.S economy entering an extended soft path, with both service and manufacturing sector activity picking up at the start of the 2nd quarter, the weekly jobless claims hitting levels not seen since the late 1960s and the U.S trade balance seeing a sizeable narrowing in March. With consumer confidence coming in ahead of expectations and recovering from a fall in March, the outlook for consumer spending also looks positive and favoring the outlook for the economy and inflation.

The continued rise in commodity prices, which has seen the Bloomberg Commodity Index gain 2.33% for the current month and the rise in crude oil prices, WTI up 12.5% year-to-date, has added to the upbeat sentiment towards inflation that has seen the markets increasingly price in a 4th rate hike for the year.

In spite of the continued upward trend in mortgage rates, demand for mortgages has certainly not eased, with an ever-tightening labour market and pickup in the pace of wage growth driving new home sales at the end of the 1st quarter, new up sales up 4% in March, off the back of a 3.6% rise in February.

While a shortage of inventory continues to be an issue, existing home sales were also on the rise in March, up 1.1%, following a 3% rise in February, home buyers undeterred by 30-year fixed mortgage rates having risen by an average 55 basis points over the last year, current levels still considered attractive when compared with historical rates.

The rise in sales will continue to add upward pressure on house prices that, when combined with the upward trend on mortgage rates, will weigh on the pockets of prospective home buyers and influence the decision making process.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rate loan jumped from 4.47% to 4.58% last week, while up from 4.03% a year ago.
  • 15-year fixed rates rose from 3.94% to 4.02% last week, while up from 3.27% from a year ago.
  • 5-year fixed rates increased from 3.67% to 3.74% over the week, while up from last year’s 3.12%.

Mortgage Bankers’ Association Rates for last week were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA increased from 4.70% to 4.71%, continuing to move back towards the 7-year high hit last month.
  • The average interest rate for 30-year fixed with conforming loan balances rose from 4.66% to $4.73%, hitting the highest level since Sept-13.
  • Average 30-year rates for jumbo loan balances jumped from 4.53% to 4.64%, hitting the highest level since Jan-14.

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 0.2%, following the previous week’s 4.9% rise week-on-week. The marginal decline considered negligible when factoring in the upward trend in mortgage rates, supporting the positive March existing and new home sales figures released last week.

The Refinance Index also fell, down 0.3%, following the previous week’s 4% rise, with the refinance share of mortgage activity falling further to 37.2% of total applications, the lowest level since Sep-08 and down from the previous week’s 37.6%, the downward trend continuing.

The dilemma for prospective home buyers continues to become ever more challenging, with last week’s surge a warning of how quickly rates can move as sentiment towards inflation shifts, the lack of inflationary pressure having pinned back mortgage rates in recent years.

Recent economic data has eased concerns over the U.S economy and, with the talk of a trade war easing, it could be full steam ahead for the U.S economy in the 2nd quarter. Friday’s GDP numbers out of the U.S were better than expected and, with the U.S economy tending to fare better as the year progresses, 2.3% growth is certainly not a bad baseline going into the 2nd quarter, all of which continues to support the upward trend in borrowing costs. It’s not just mortgages that are getting hit, but also other borrowing costs, making it advisable to pay down loans and credit cards sooner rather than later in order to minimize the impact of rising borrowing costs on disposable incomes.

For the week ahead, it’s another hectic economic calendar, with inflation, personal spending and private sector PMI numbers scheduled for release ahead of the all-important nonfarm payroll and wage growth figures on Friday. The FED will also be making its May monetary policy decision on Wednesday and, while few are expecting rates to be raised, the FOMC statement will likely have an influence, positive economic data and a likely rise in inflation supporting a more hawkish statement.

All things considered, mortgage rates could well be on the rise again in the coming week, though the Oval Office is more than capable of overshadowing the FED and economic data should the need arise.

U.S Mortgage Rates See Largest Increase since February

A build up in inflationary pressures, reflected in the Beige Book and conveyed by some relatively hawkish FOMC member chatter saw 10-year Treasury yields hit the highest level in 4-weeks, driving the 30-year fixed-rate mortgage average to 4.47%, the highest since Jan-14.

There may have been a soft patch in the economy through the 1st quarter, but last week’s economic data suggested that it was just a soft patch and nothing more concerning, with retail sales bouncing back at the end of the quarter.

For now, the acceleration in the pace of wage growth should avoid a material decline in mortgage applications, though a tightening in the approval process will have some influence should mortgage rates continue to move towards 5%.

The continued demand for homes will provide further support to the housing sector, with the impact of limited supply and rising mortgage rates likely to ultimately see a shift in the housing sector and demand for mortgage applications and new homes. We’re not there yet, however, with mortgage rates still well below historical averages, but it will become an issue should the upward trend in mortgage rates persist in the coming weeks.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rate loan rose from 4.42% to 4.47% last week, while up from 3.97% a year ago.
  • 15-year fixed rates jumped from 3.87% to 3.94% last week, while up from 3.23% from a year ago.
  • 5-year fixed rates increased from 3.61% to 3.67% over the week, while up from last year’s 3.10%.

Average interest rates for 30-year fixed, backed by the FHA increased from 4.66% to $4.70%, moving back towards the 7-year high hit last month, while the average interest rate for 30-year fixed with conforming loan balances remained unchanged at 4.66%, continuing to move around a 4-year high. 30-year rates for jumbo loan balances held steady at 4.53%, following the previous week’s fall.

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 4.9% week-on-week, more than reversing the previous week’s 1.9% fall.

The Refinance Index was also on the rise, up 4% from the previous week, reversing the previous week’s 2% fall and bringing to an end the recent downward trend that contributed to the refinance share of mortgage activity hitting the lowest level since Sept-08.

In spite of the rise in the Refinance Index, the refinance share of mortgage activity fell from 38.4% to 37.6% of total applications, continuing to sit at the lowest level since Sept-08.

While a recent decline in mortgage rates has drawn in some refinancing, new mortgage applications were the prime beneficiary, as home buyers continued to complete applications ahead of a next rate hike by the FED and the prospects of rising inflationary pressures that would hit 10-year U.S Treasuries.

Following the latest weekly jump in mortgage rates, home buyers will face a difficult question, with concerns over a more aggressive rate path and a degree of uncertainty in the economic outlook for the year there to consider and that’s before the possible impact of trade tariffs on the U.S economy.

1st quarter growth has a tendency to slow, with the U.S economy tending to see momentum build through the year. How much slower growth was in the 1st quarter will be of influence in the coming weeks, with 1st quarter 1st estimate GDP numbers scheduled for released on Friday.

Ahead of the GDP numbers, economic data includes consumer confidence, private sector PMI and durable goods orders. The markets will be looking for consumer confidence to remain at current levels, with private sector activity to also rise, though input and output price inflation across the private sector will also get plenty of attention in the early part of the week, any uptick supporting Treasury yields.

On top of the economic data, FOMC member chatter will also be of influence, FOMC members seemingly accepting the need for an additional 3 rate hikes for the current year, though much will depend on the effect of trade tariffs and noise from the Oval Office, the U.S President more than capable of rocking the boat.

U.S Mortgage Rates – Mixed but Look Ready to Rise Again

While economic data was on the lighter side, the annual rate of baseline inflation accelerated to 2.1% in March, with headline inflation also jumping. The combination of the pickup in the rate of inflation, coupled with the FOMC meeting minutes that portrayed a more hawkish than anticipated Committee was enough to suggest that the new Chair is willing and able to take a more aggressive path on policy to protect the economy.

With the stats indicating that mortgage rates may soon resume their upward trend, the rhetoric between China and the U.S also improved through the week, easing immediate fears of a trade war, with the U.S President even suggesting a willingness to re-enter TPP talks. A missile strike on Syria and some jitters over peace in the Middle East and Russia’s involvement in Syria will be of some influence in the week ahead, but if the data stacks up and FOMC member chatter talks up the need to manage inflation, it could be the week that mortgage rates make a move.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rate loan rose from 4.40% to 4.42% last week, while up from 4.08% a year ago.
  • 15-year fixed rates held steady at 3.87% last week, while up from 3.34% from a year ago.
  • 5-year fixed rates slipped from 3.62% to 3.61% over the week, while up from last year’s 3.18%.

Average interest rates for 30-year fixed, backed by the FHA slipped from 4.74% to 4.66%, easing back from the almost 7-year high hit last month, while the average interest rate for 30-year fixed with conforming loan balances slipped from 4.69% to 4.66%, continuing to move around a 4-year high. 30-year rates for jumbo loan balances slipped from 4.56% to 4.53%.

According to the weekly figures released by the Mortgage Bankers Association, the Market Composite Index, which is a measure of mortgage loan application volume, fell by 1.9% week-on-week, following the previous week’s 3.3% decline. The Refinance Index fell by a further 2%, following the previous week’s 5% slide, to take the refinance share of mortgage activity to 38.4%, the lowest since Sept-08.

Refinance mortgage activity has certainly been on the decline and falling at a greater pace than mortgage applications, with refinance mortgage activity has been on the rise last year, in a more rate friendly environment, the FED has been talking about a shift in policy for some time supported by a robust U.S economy.

While refinance mortgages saw a large fall in recent weeks, the MBA also released March figures for its Builder Application Survey that showed mortgage applications for new home purchases falling by 2.6% compared with March 2017, while up 14% month-on-month, to make it a third consecutive month-on-month rise in applications for new home mortgages.

The increase in applications for mortgages for new homes is in line with the seasonal shift, with the spring considered peak season for new home buyers, though tightening credit terms and inventory numbers will continue to have an influence on the total number of mortgage applications, which have been on a downward trend of late.

Good news for home buyers is that there has been a pickup in wage growth and, while March’s nonfarm payroll numbers were weak, the general trend in the labor market remains positive for home buyers, with mortgage rates still considered favorable when compared with historical numbers.

Last week’s March inflation figures have reflected a pickup in inflationary pressure and, with the FED’s more hawkish than expected FOMC meeting minutes released last Wednesday, the recent hovering of mortgage rates at around current levels may come to an end, with another jump likely, particularly should inflationary pressures continue to build.

The more inflationary pressure, the more aggressive the FED will have to be and that’s going to mean a more marked pickup in mortgage rates in the coming months.

For the week ahead, on the economic data front, March retail sales figures will be of particular interest, as will the latest set of building permit and housing start numbers, with some manufacturing PMI numbers and FOMC member chatter for the markets to also contend with.

Some recent economic indicators have been on the softer side, easing some pressure on yields, while the threat of a trade war with China and the missile strikes on Syria will have further implications, both factors that the market and the FED will need to consider through the week that could lead to near-term downward on mortgage rates in the event that either or both escalate.

U.S Mortgage Rates – Down for a 2nd Week

Adding to the downside for Treasury yields was some disappointing economic data out of the U.S, with manufacturing and service sector PMI numbers showing slower growth at the end of the 1st quarter, suggesting that a 4th rate hike for the year may be over-bullish unless the economy accelerates through the early part of the 2nd quarter, with inflation continuing to sit shy of the FED’s 2% target.

The recent softening in mortgage rates has been relatively minor, however, when looking at the year-on-year increase, though the uptick in mortgage rates have had limited impact on applications and on the demand side that continues to weigh on the housing supply in the U.S.

How China and the U.S resolve the current trade dispute will be of particular influence to housing demand and for mortgage applications. China’s tariffs are far more punitive than that of the U.S, farming, and manufacturing likely to take a sizeable hit if China goes through with its threat. The longer any tariffs are imposed the worse it would be for the U.S economy and ultimately the housing sector, though mortgage rates would likely also ease further in such an event.

For now, sentiment has shifted, with both sides stating that there is no trade war, suggesting that the recent moves have been nothing more than a muscle flexing exercise.

A resolution to the current dispute would likely see mortgage rates begin to climb, though following March’s nonfarm payroll figures released on Friday, doubts over a 4th rate hike may linger, in spite of the jump in wage growth that would be far more influential when considering the current unemployment rate.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rate loan slipped to from 4.44% to 4.40% last week, while up from 4.1% a year ago.
  • 15-year fixed rates fell from 3.90% to 3.87%, while up from 3.36% from a year ago.
  • 5-year fixed rates stood at 3.62%, down from the previous week’s 3.66%, while up from last year’s 3.14%.

Average interest rates for 30-year fixed, backed by the FHA eased from 4.75% to 4.74%, moving back from the almost 7-year high hit earlier in the month, while the average interest rate for 30-year fixed with conforming loan balances remained steady at 4.69% to hold at a 4-year high. 30-year rates for jumbo loan balances slipped from 4.6% to 4.56% following a 5 basis point rise last week.

The slide in mortgage rates will ease some of the pressure on those looking to get on the property ladder, though the continued rise in demand for housing places further pressure on U.S house prices near-term that will likely continue to be the biggest hurdle for those looking to purchase.

March’s wage growth figures and signs of a possible shortage of skilled workers could finally begin to offset the recent increases in mortgage rates, however, which should east some of the pressure coming from the direction of the real estate market and support demand for U.S mortgage applications.

According to figures released by the Mortgage Bankers Association, the Market Composite Index, a measure of mortgage loan application volume, fell by 3.3% week-on-week, with the Refinance Index falling 5% from the previous week.

The larger fall in the Refinance Index saw the refinance share of mortgage applications fall to the lowest level since September 2008, refinances accounting for 38.5% of total applications, down from the previous week’s 39.4%.

In spite of the weekly fall in mortgage applications, mortgage applications were up 5% over the last 12-months, the rise in applications coming in spite of the uptick in mortgage rates, with a tightening labor market and rising wages supporting demand through the last 12-months.

While applications were up, the MBA also reported a fall in mortgage credit availability in March, with the Mortgage Credit Availability Index (MCAI) falling 1.5% to 177.9. A fall in the MCAI is indicative of a tightening in lending standards. The Government MCAI also fell, down 2.1% in March, the numbers aligned with the upward trend in mortgage rates leading to the need to tighten lending standards in recent months.

For the week ahead, inflation figures out of the U.S on Wednesday along with the release of the FOMC meeting minutes will influence Treasury yields and mortgage rates, with trade war chatter another factor to be considered, the recent downtrend in mortgage rates likely to be tested should Trump back off on trade tariffs and inflation figures come in ahead of expectations.

Last week’s wage growth figures would certainly support a pick-up in inflation in the coming months, assuming that are no economic speed bumps along the way, with trade tariffs another inflation driver should the U.S administration act on its recent threats.

U.S Mortgage Rates Hold Steady for Now

The Chinese government reportedly discussing trade terms with the U.S administration following the introduction of steel and aluminum tariffs and the more than $50bn in tariffs on Chinese goods to the U.S.

Economic growth in the U.S has seen the unemployment rate tumble over the last 24-months and, while this is certainly a positive for home buyers, missing out on the final piece of the labor market jigsaw, wage growth, would be both a negative for the economy in general and for the real estate sector.

Recovery in the U.S and globally has been a long and slow one, with even the FED considered to still be highly accommodative, despite the recent rate hikes, with the lack of wage growth not only impacting household disposable incomes and saving rates, but also purchasing power for those looking to get on to the property ladder.

While mortgage rates reversed in the week ending 28th March, a trade war with China would not only hit China but also the U.S economy and undoubtedly labour market conditions, so it was of little surprise that U.S 10-year Treasury yields slid back to an end of quarter 2.74%, easing upward pressure on mortgage rates that closely follow 10-year yields.

Mortgage rates have not seen similar declines to that of 10-year Treasury yields, however, which have eased back from close to 3%, with the markets even ignoring an uptick in the FED’s preferred Core PCE Price Index figures, year-on-year, last week.

Other stats released through the week that would be considered relevant included the weekly jobless claims figures that continued to reflect an ever-tightening labour market, a jump in U.S pending home sales in February, the 3.1% rise adding further pressure on inventories, with S&P / CS Composite House Price Index of the 20 most major metropolitan areas of the U.S rising by 6.4%, reflecting the real estate market environment that prospective home buyers are facing.

Rising mortgage rates and house prices, inventory shortages, an uptick in inflation and tepid wage growth are certainly not what the doctor ordered for those on the hunt for their dream home.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rate loan slipped to from 4.45% to 4.44% last week, while up from 4.14% a year ago.
  • 15-year fixed rates fell from 3.91% to 3.90%, while up from 3.39% from a year ago.
  • 5-year fixed rates stood at 3.66%, down from the previous week’s 3.68%, while up from last year’s 3.18%.

Average interest rates for 30-year fixed, backed by the FHA increased from 4.69% to 4.75%, moving back towards the almost 7-year high hit earlier in the month, while the average interest rate for 30-year fixed with conforming loan balances reversed the previous week’s fall, rising from 4.68% to 4.69% and back to a 4-year high. 30-year rates for jumbo loan balances jumped from 4.55% to 4.6% following a hold the previous week.

Last week’s 1 basis point decrease in 30-year fixed mortgage rates was certainly not too bad an outcome for home buyers deciding to get moving, though the reality remains that even with 10-year Treasury yields seeing a marked decline, the fall in mortgage rates was just a reversal of the previous week’s minor gains and unlikely to make an impact on purchasing power and household disposable incomes.

According to figures released by the Mortgage Bankers’ Association, mortgage loan application volume surged by 4.8% on a seasonally adjusted basis, in the week ending 23rd March, more than reversing the previous week’s 1.1% fall. The Refinance Index jumped by 7%, also more than reversing the previous week’s 5% fall, leading to refinance share of total applications rising to 39.4% from the previous week’s 38.5%, which had been at the lowest level since Sep-08.

While prospective home buyers will be viewing recent moves as a sign that the recent upward move in mortgage rates may have topped out, the week ahead may suggest otherwise, with economic data scheduled out of the U.S including March’s nonfarm payroll and wage growth figures.

Any unexpected jump in wage growth, supported by another set of decent payroll figures and that 4th rate hike just may see itself penciled in by the markets and that would certainly give mortgage rates a nudge towards the much talked about 5%.

The conclusion should ultimately be that, barring any material economic slowdown, the path of least resistance for mortgage rates remains upwards and the latest bounce in refinance rates suggests that expectations are for another bounce in mortgage rates to materialize in the coming weeks.

Bad news for prospective home buyers is that the rise in refinances also suggests that existing home contributions to inventory numbers are unlikely to improve anytime soon, which will add further upward pressure on house prices.

U.S Mortgage Rates – Onwards and Upwards

That was another week to remember in the financial markets and for prospective home buyers, with the FED making its much anticipated March rate hike, while President Trump roiled the markets with the introduction of, not only tariffs on steel and aluminium imports into the U.S but also a $50bn tariff on Chinese goods bound for the U.S.

For prospective home buyers, the fact that the FED held on to its 3 rate hike projection for the year, coupled with an improved outlook towards the U.S economy was certainly a positive and may have been a favourable near-term outcome, all things considered, but there may be trouble ahead should economic conditions continue to remain favourable.

10-year Treasury yields would have certainly had a different movement through the week, if the market panic over the prospects of a trade war hadn’t developed in response to Trump’s tariffs, the markets jumping into the safety of U.S Treasuries through the 2nd half of the week.

Assuming that a trade war is averted, economic data out of the U.S last week was relatively upbeat and could well push the FED to take a more aggressive path towards policy normalization.

It’s also worth noting that, while 10-year Treasury yields have been on a downward trend in recent weeks, the upward trend in mortgage rates has resumed. 10-year Treasury yields ended last week at 2.81%, down from the previous week’s 2.84% and the week prior’s 2.89%.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rate loan rose to from 4.44% to 4.45% last week, while up from 4.23% a year ago.
  • 15-year fixed rates rose from 3.90% to 3.91%, while up from 3.44% from a year ago.
  • 5-year fixed rates stood at 3.68%, up from the previous week’s 3.67% and from last year’s 3.24%.

Average interest rates for 30-year fixed, backed by the FHA decreased from 4.73% to 4.69%, pulling back from last week’s almost 7-year high, while the average interest rate for 30-year fixed with conforming loan balances decreased from 4.69% to 4.68%, sitting just shy of last week’s 4-year high. 30-year rates for jumbo loan balances held steady at 4.55%, following last week’s 0.1 percentage point drop.

Last week’s 1 basis point increase in 30-year fixed mortgage rates was certainly not too bad an outcome for home buyers deciding to get moving, with the upward trend resuming following last week’s fall in rates.

Till now, the upward trend in mortgage rates has failed to deter home buyers from jumping into the property market, with existing home sales rising by 3% in February, according to figures released last week. The increase offset January’s 3.2% fall, taking existing home sales to 5.54m on an annualized basis.

The numbers continue to suggest that there is no shortage of buyers at current levels, while inventories remain an issue for the real estate sector and for those looking.

According to the latest figures from the Mortgage Bankers’ Association, the Market Composite Index, which is a measure of mortgage loan application volume, fell by 1.1% in the week ending 16th March, with the Refinance Index sliding by 5% from the previous week.

The slide in the Refinance Index left the refinance share of mortgage activity at just 38.5%, down from the previous week’s 40.1% to the lowest level since Sep-08.

Homeowners looked to have got it right this time around, with the FED’s forward guidance on monetary policy and improving labor market and economic conditions, amidst a low inflationary environment providing the most favorable conditions for homeowners looking to refinance and obtain better rates before the mortgage rate environment takes a steeper path to normalization. Fixed rates are certainly the way forward when looking ahead to next year and 2020.

For those looking to purchase a home, while the FED held it’s 3 rate hike projection for the current year, the June projections could paint a materially different picture should economic conditions continue to improve. If the FED does pencil in a 4th rate hike in the June projections, coupled with the already more hawkish rate paths for next year and for 2020, home buyers can expect mortgage rates to begin to make a move through 5% and they may even look to touch 6% in 2020.

There’s certainly enough reason to make the move sooner rather than later, particularly when considering the fact that mortgage rates have only declined once in the last eleven weeks.

For the week ahead, the FED’s preferred inflationary metric, Core PCE Price Index figures are scheduled for release on Thursday, which will certainly have an influence on yields and near-term sentiment towards both monetary policy and mortgage rates, though President Trump may pin back yields for another week, if the trade war chatter persists into Good Friday.

U.S Mortgage Rates – Down for the 1st Time in 10-weeks

That was quite a week for the financial markets and prospective home buyers will have some mixed feelings going into next week.

February Inflation figures released on Tuesday provided little evidence of a pickup in inflationary pressure, easing market panic over the prospects of a more aggressive FED, while yields slid through the week, as U.S President Trump wielded the axe, the latest victim being Rex Tillerson. Appointments of replacements for both Cohn and Tillerson raised some eyebrows and, while macroeconomic data released through the week was skewed to the positive, demand for Treasuries rose through the week, leaving 10-year Treasury yields at 2.84% by the end of the week, down 5 percentage points from the previous Friday’s 2.89% and U.S equity markets in the red again.

The effects of soft wage growth may be offset by the tax reform bill and a pause in the rise in mortgage rates may be positive, but with February’s building permits and housing starts falling by 5.7% and 7% respectively, inventory shortages are unlikely to reverse anytime soon.

Prelim March consumer sentiment figures, released on Friday continued to sit at 14-year highs, supported by a tight labor market, but the survey also revealed concerns of a fall in household income and a pickup in inflationary pressures, the combination of which would lead to even more home buyers being priced out of the market.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rates loan fell from 4.46% to 4.44% last week, while up from 4.30% a year ago.
  • 15-year fixed rates fell from 3.93% to 3.90%, while up from 3.50% from a year ago.
  • 5-year fixed rates stand at 3.67%, up from the previous week’s 3.63% and from last year’s 3.28%.

Average interest rates for 30-year fixed, backed by the FHA increased from 4.68% to 4.73%, the highest level since Jul-11, while the average interest rate for 30-year fixed with conforming loan balances increased from 4.65% to 4.69%, the highest level since January 2014. 30-year rates for jumbo loan balances in contrast, continued to fall, down from 4.56% to 4.55%.

Refinancing rates are currently as follows:

With 30-year fixed mortgage rates easing for the 1st time in 10-weeks, mortgage applications continued to rise in the week ending 9th March, up by 0.9% on an adjusted basis, according to the Mortgage Bankers’ Association, following the previous week’s 0.3% increase.

After the rise in refinance applications in the week ending 2nd March, refinance applications fell by 2% in the week ending 9th March. Refinance mortgage applications accounted for 40.1% of total applications in the week, which was down from the previous week’s 41.8%, to the lowest level since Sep-08.

With affordability continuing to be a key issue for those looking to buy new homes, the latest fall in mortgage rates may ultimately provide little comfort when considering the housing sector data that was released out of the U.S on Friday.

Supply and demand imbalances have continued to pressure house prices upwards and, while mortgage rates on an upward trend, the refinance mortgage numbers suggest that further declines in refinance mortgage are likely, while new mortgage applications will likely continue to rise near-term, though much will depend on the pace of the increase in mortgage rates and of course, how house prices and mortgage rates are impacted by a possible shift in monetary policy expectations.

The continued rise in new mortgage applications supports the negative outlook from an inventory prospective, which will continue to push home prices higher, until such time that new mortgage applications take a sizeable fall and begin to raise concerns of a slowdown in the real estate market.

This week’s FED monetary policy decision and the release of the FOMC’s economic projections, which coincide with new FED Chair Jerome Powell’s first policy press conference will also be of significant importance.

The FED Funds Futures have the probability of a rate hike in the coming week at 91.6%. Recent inflation and wage growth figures have led to expectations of a 4th rate hike being lowered, though there has been little commentary to counter or support the market’s view.

As we saw last week, it’s not just going to be down to the economic data or FED monetary policy and the economic projections in the coming week, with U.S President Trump’s reshuffling of his cabinet that has involved the ousting of key senior members of the administration, also a factor, alongside any further talk of punitive trade tariffs on China and other trade partners.

U.S Mortgage Rates – Up for a 9th Week in a Row

The mood across the financial markets improved last week, with the Dow Jones Industrial average reversing the previous week’s 3.05% fall, ending the week up 3.2%, as investor fear of a more aggressive rate path for the year ahead eased.

Market fears of a trade war persisted through the week, however, with Trump’s steel and aluminum trade tariffs being introduced on Thursday, though there was some relief with Canada and Mexico’s exclusion and talk of being flexible with other trading partners including Australia.

Time will tell how China and other trading partners including the EU respond to the tariffs, with the possibility of a trade war continuing to loom large going into the start of the week.

Economic data out of the U.S last week was on the positive side, with the mid-week ADP Employment change figures impressing ahead of the government figures released on Friday.

The good news for the equity markets and the bad news for prospective homeowners was Friday’s labor market numbers. While labor market conditions continued to tighten, with 313,000 jobs being added in February, wage growth slowed to just 0.1% from January’s 0.3%.

While the softer than expected wage growth figures eased the prospects of a 4th rate hike this year, the softer wage growth figures and the continued rise in mortgage rates continue to deliver bad news to those applying for mortgages.

10-year U.S Treasury yields continued to hover at the 2.9% level, ending the week at 2.89%, contributing to the upward move in mortgage rates for the week ending 8th March.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rate loan rose to from 4.43% to 4.46% last week and up from 4.21% a year ago.
  • 15-year fixed rates rising from 3.90% to 3.93% and from 3.44% from a year ago.
  • 5-year fixed rates stand at 3.63%, up from the previous week’s 3.62% and from last year’s 3.23%.

Average interest rates for 30-year fixed, backed by the FHA was unchanged at 4.68%, while the average interest rate for 30-year fixed with conforming loan balances increased from 4.64% to 4.65%, the highest level since January 2014. 30-year rates for jumbo loan balances, in contrast, continued to fall, down from 4.57% to 4.56%

Refinancing rates are currently as follows:

While 30-year fixed mortgage rates increased for a 9th consecutive week, mortgage applications continued to rise in the week ending 2nd March, with mortgage applications rising by 0.3% on an adjusted basis, according to the Mortgage Bankers’ Association, though the rise was significantly less than the previous week’s 2.7% increase.

Following the fall in refinance applications in the week ending 23rd February, refinance applications increased by 2% in the week ending 2nd March, supported by the previous week’s fall in refinance mortgage rates. Refinance mortgage applications accounted for 41% of total applications in the week, which was unchanged from the previous week, following a fall from 44.4%

The declining trend in jumbo loan rates has yet to be reflected in the overall trend seen in mortgage rates, but with 10-year Treasury yields ending the week at sub-2.9% levels and concerns over a pickup in inflation easing, mortgage rates may steady in the week ahead.

Affordability remains the key issue in the housing sector. A continued lack of inventory, which has supported the upward trend in house prices, coupled with the 9-week gain in mortgage rates, is not a great combination, with the pace of increase in new home builds unlikely to fill the gap near-term. The January slide in existing home sales and tumble in new home sales and pending home sales paint a bleak picture, with this week’s release of February building permits and housing starts likely to add further upward pressure on house prices, with forecasts pointing towards a fall.

The big test in the coming week will be February’s inflation figures that are scheduled for release on Tuesday. Core inflation is forecasted to ease from 0.3% to 0.2% month-on-month, with year-on-year core inflation forecasted to hold steady at 1.8%. Disappointing numbers should see Treasury yields pull back, easing some of the upward pressure on mortgage rates near-term.

It’s not just the stats that will influence, however, with any threat of a trade war from China or the EU likely to offset any fall in yields, with concerns over the impact of a trade war on the global economy likely to overshadow any upbeat sentiment towards current economic conditions.

U.S Mortgages Rates Up Again. That’s 8 Weeks in a Row

It was another tough week for the markets, with the Dow Jones Industrial Average sliding 3.05%, as the markets not only faced the prospects of a more hawkish FED, but also a U.S President intent on rocking the boat, by kicking off a trade war. The trade war comes off the back of a currency war that is already in full swing, which has left the Dollar in the red year-to-date in spite of the shift in sentiment towards monetary policy and rise in U.S Treasury yields.

In the week, FED Chair Jerome Powell’s testimony to Congress was in line with expectations for some, but for those looking to acquire a new home, the prospects of at least 4-rate hikes this year will need to be factored in when working out the financials.

The good news is that the U.S economic outlook remains upbeat and the FED has little interest in slowing down growth, which is not trailblazing by historical standards. The bad news is that the continued move towards monetary policy normalization is unlikely to shift into reverse anytime soon, which means that the low-interest rate environment enjoyed in recent years is coming to an end.

From the economic data released out of the U.S last week, new home sales slumped 7.8% in January, the slide coming off the back of a 7.6% fall in December. Added to that, pending home sales were also on the slide, down 4.7% in January, following December’s no change. It may be too early to suggest that the January numbers can be attributed to rising rates, but the continued rise in mortgage rates is certainly closing the door for many and that will ultimately impact the housing sector.

Affordability is a real issue and, while wage growth picked up in January, house prices have been rising at a more solid pace. A tightening labor market and inventory constraints in the housing sector have left the supply and demand curve in the favor of homeowners.

We could see scales begin to tip the other way should mortgage rates continue to rise and begin to approach 5% levels.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rate loan rose to from 4.40% to 4.43% last week and up from 4.10% a year ago.
  • 15-year fixed rates rising from 3.85% to 3.90% and from 3.32% from a year ago.
  • 5-year fixed rates stand at 3.62%, down from the previous week’s 3.65%, while up from last year’s 3.14%.

Average interest rates for 30-year fixed, backed by the FHA rose jumped from 4.58% to 4.68%, while the average interest rate for 30-year fixed with conforming loan balances was unchanged at 4.64%. 30-year rates for jumbo loan balances, in contrast, fell from 4.62% to 4.57%

Refinancing rates are currently as follows:

  • 30-year fixed to refinance rates slipped from 4.32% to 4.30%,
  • 15-year fixed to refinance rates fell from 3.73% to 3.69%.
  • 10-year fixed to refinance rates fell from 3.65% to 3.62%.

Interestingly, in spite of the softer pending and new home sales figures, coupled with the continued rise in interest rates, mortgage applications rose by 2.7% in the week ending 23rd February, seasonally adjusted. On an unadjusted basis, the MBA reported that the Market Composite Index, which is a measure of mortgage loan application numbers, fell by 6% week-on-week.

Despite the continued fall in refinance rates, the refinance share of total mortgage applications fell further in the week ending 23rd February, down from 44.4% to 41.8%. The continued fall is a reflection of last year’s increased activity in anticipation of rising rates through late last year and the first half of this year.

The fall in jumbo loan rates may provide hope that the upward trend in mortgage rates may be coming to an end. But, with rates linked to 10-year U.S Treasury yields, the week ahead is another busy one, which could see yields get another boost should the economic data impress.

Key stats scheduled for release in the week ahead include February’s nonfarm payroll and wage growth figures, 4th quarter unit labor cost numbers and service sector PMI numbers, with FOMC member chatter also there to consider.

Last week, we heard from voting member Dudley, who considered 4-rate hikes in a single year to still be gradual, so getting a sense of how other members define gradual will be of influence. As of last week, while the probability of a March rate hike sits close to 100%, the probability of 4 rate hikes this year is still relatively low, so how the economy, wage growth and inflation fare through the first half of the year will be material, as will the FED’s economic projections that are scheduled for release later this month.

U.S Mortgages Rates: Up for a 7th Week in a Row

The markets had another week of volatility, which needed a Friday rally in the Dow Jones, S&P500, and NASDAQ to end the week in positive territory.

While we saw the equity market fear of yields subside in the previous week rally, this was not the case last week and the release of the FED’s monetary policy meeting minutes from the January FOMC meeting certainly caused a stir.

From the minutes it was clear that members of the FOMC had upwardly revised their economic projections when considering economic indicators going into the end of January meeting, whilst also factoring in the Tax Reform Bill that hadn’t been considered in the December projections.

Coupling the minutes with January’s wage growth and inflation figures, the general sense is that the FED may need to lift rates on at least four occasions this year, the first expected to be in next month’s policy meeting.

The Dow reversed a more than 300 point gain to end the day down 166 points following the release of the minutes, with the 10-year Treasury yield jumping to a fresh 4-week high 2.95% on Wednesday to hit mortgage rates, before yields eased back to 2.87% by Friday’s close.

It’s all about interest rates and inflation and mortgage rates are at the mercy of both.

Freddie Mac rates for new mortgages last week were quoted to be:

  • 30-year fixed rate loan rose to from 4.38% to 4.40% last week and up from 4.16% a year ago.
  • 15-year fixed rates rising from 3.84% to 3.85% and from 3.37% from a year ago.
  • 5-year fixed rates stand at 3.65%, up from the previous week’s 3.63% and 3.16% a year ago.

Refinancing rates are currently as follows:

  • 30-year fixed to refinance rates slipped from 4.32% to 4.32%,
  • 15-year fixed to refinance rates rose from 3.70% to 3.73%.
  • 10-year fixed to refinance rates were unchanged at 3.65%.

The moves in the refinancing rates may provide prospective home buyers with some hope, in that 30-year fixed to refinance rates slipped, but when considering the key drivers to 10-year treasury yields, which ultimately impact mortgage rates and borrowing costs in general, current levels with an upward bias are likely to persist through March.

For those who have delayed buying a new home, more delay could well mean more pain, with 30-year fixed rates now at the highest level since April of 2014.

The unknown, for now, is how aggressively the FED has upwardly revised its economic projections. The March 20-21st FOMC meeting, which will conclude with the release of the FOMC’s 1st quarter economic projections will be key to the direction of mortgage rates through the Spring.

Between now and the next FOMC, February wage growth and inflation figures will also need to be considered. With consumer confidence at such high levels, the tax reform bill and a further tightening in the labor market that has finally led to some more meaningful growth in wages, there’s certainly good cause for the FED to take a more optimistic outlook. Such a view may well see some of the more hawkish members of the FED pencil in a 5th hike this year. 10-year yields could move through to 3% levels and, as home buyers are discovering, that’s not going to be a favorable outcome.

While we tend to focus on mortgage rates, it’s worth considering the impact of rising interest rates on borrowing costs in general.

Consumers have enjoyed a record low-interest rate environment for some time and this has contributed to rising debt, whether by way of leverage in the financial markets, bank loans or credit card outstandings. As the U.S begins to enter into a possibly more aggressive period of monetary policy normalization, offsetting the effects of rising mortgage rates, by reducing debt elsewhere would be a prudent move.

Looking ahead to next week and key data out of the U.S that can further impact mortgage rates and sentiment towards FED monetary policy:

U.S Consumer Confidence, Core Durable Goods, 2nd Estimate, 4th quarter GDP, Core PCE Price Index Personal Spending and Wage Growth will be there for the markets to consider.

The Core PCE Price Index is the FED’s preferred measure for inflation, so any move towards 2% and the chances of a 5th rate hike this year rises and borrowing costs with it.

Wage growth figures will be released after Freddie Mac releases the coming week’s fixed rates, but there’s plenty of data ahead of Thursday’s close to influencing yields.

Outside of the data, FED Chair Jerome Powell will give his first testimony to the Senate since taking over from Yellen at the start of the month. This will also be of influence, with Powell likely to face some tough questions on policy, having just stepped into the most powerful central bank post in the world.

Onwards and upwards, but we may see mortgage rates begin to steady, with 30-year fixed having surged the last week of December’s 3.99%.

Unsurprisingly, mortgage applications nosedived in response to the persistent rise in rates, with the Mortgage Bankers Association reporting a 6.6% week-on-week fall in applications in the week of 12th February.