Mortgage rates fell for the 2nd time in 4-weeks in the week ending 10th June.
Reversing a 4 basis points rise from the previous week, 30-year fixed rates decreased by 3 basis points to 2.96%.
The modest decline in mortgage rates left 30-year fixed rates at sub-3% for a 3rd consecutive week.
Compared to this time last year, 30-year fixed rates were down by 25 basis points.
30-year fixed rates were still down by 198 basis points since November 2018’s last peak of 4.94%.
Economic Data from the Week
It was a particularly quiet first half of the week on the U.S economic calendar.
Economic data through the 1st half of the week included job openings and trade data for April.
The stats were skewed to the positive supporting the unwavering optimism towards the economic recovery.
Particularly disappointing nonfarm payroll numbers from the week prior and uncertainty ahead of inflation and labor market numbers later in the week weighed on Treasury yields and ultimately mortgage rates.
Freddie Mac Rates
The weekly average rates for new mortgages as of 10th June were quoted by Freddie Mac to be:
- 30-year fixed rates fell by 3 basis points to 2.96% in the week. This time last year, rates had stood at 3.21%. The average fee rose from 0.6 to 0.7 points.
- 15-year fixed fell by 4 basis 2.23% in the week. Rates were down by 39 basis points from 2.62% a year ago. The average fee remained unchanged at 0.6 points.
- 5-year fixed rates decreased by 9 basis points to 2.55%. Rates were down by 55 points from 3.10% a year ago. The average fee remained unchanged at 0.2 points.
According to Freddie Mac,
- The economy is recovering at a remarkably fast pace. As the pandemic restrictions continue to lift, economic growth will remain strong over the coming months.
- Despite the stronger economy, the housing market is experiencing a slowdown in purchase application activity due to modestly higher mortgage rates.
- However, it has yet to translate into a weaker home price trajectory because the shortage of inventory continues to cause pricing to remain elevated.
Mortgage Bankers’ Association Rates
For the week ending 4th June, the rates were:
- Average interest rates for 30-year fixed to conforming loan balances decreased from 3.17% to 3.15%. Points decreased from 0.39 to 0.34 (incl. origination fee) for 80% LTV loans.
- Average 30-year fixed mortgage rates backed by FHA decreased from 3.16% to 3.12%. Points rose from 0.31 to 0.34 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances decreased from 3.34% to 3.29%. Points decreased from 0.38 to 0.32 (incl. origination fee) for 80% LTV loans.
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, fell by a further 3.1% in the week ending 4th June. In the week prior, the index had fallen by 4.0%.
The Refinance Index fell by another 5% from the previous week and was 27% lower than the same week one year ago. The index had declined by 5% from the previous week.
In the week ending 4th June, the refinance share of mortgage activity decreased from 61.3% to 60.4%. The share had declined from 61.4% to 61.3% in the previous week.
According to the MBA,
- Most of the decline in mortgage rates came last week, with the 30-year fixed mortgage rate declining to 3.15%. This likely impacted refinance applications.
- With fewer homeowners able to take advantage of lower rates, the refinance share dipped to the lowest level since April.
- The average loan size on a purchase application edged down to $407,000, below the $418,000 record set in February.
- Home-price growth continues to accelerate, driven by favorable demographics, the recovering job market and economy, and housing demand far outpacing supply.
For the week ahead
Wholesale inflation and retail sales figures will draw attention and influence mortgage rates.
The main event of the week, however, will be the FOMC monetary policy decision and projections.
Expect these to be the key to U.S Treasury yields and mortgage rates in the week ahead.
From elsewhere, economic data from China will also be a factor.