US mortgage rates rise as incentives and statistics point to faster recovery

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Fixed rates at 30 years increased by 3 basis points to 3.18%. The previous week, 30-year fixed rates had dropped 9 basis points to a new historic low of 3.15%.

Compared to the same period last year, the 30-year fixed rates fell 64 basis points.

Fixed 30-year rates have also dropped 176 basis points since the last high of 4.94% in November 2018.

Economic data of the week

Key statistics included the market’s preferred private sector PMI ISM figures and non-agricultural ADP employment figures for May.

Both manufacturing and non-manufacturing PMIs slowed the contraction. The very large non-manufacturing PMI dropped from 41.8 to 45.4.

On Friday, markets anticipating official labor market figures, ADP figures exceeded forecasts. Non-farm employment fell by 2.76 million in May, much better than a forecast decline of 9 million.

The rise in PMIs from China and the eurozone also boosted demand for riskier assets during the week.

On the political front, the announcement of a large fiscal stimulus from Germany and more expectations in the EU and the United States have added to the renewed risk appetite.

On the geopolitical risk front, there has also been no major movement from Beijing or Washington to scare the markets.

A move away from safe havens led to higher US Treasury yields and ultimately higher mortgage rates.

Freddie Mac Pricing

Freddie mac be: “Data-reactid =” 33 “>Weekly average rates for new mortgages starting at 4e June were cited by Freddie mac be:

  • Fixed rates at 30 years increased by 3 basis points to 3.18% during the week. Rates were down from 3.82% from a year ago. The average royalty went from 0.8 to 0.7 point.
  • The 15-year fixed rate remained unchanged at 2.62% during the week. Rates were down 3.28% from a year ago. The average royalty remained unchanged at 0.7 point.
  • Fixed 5-year rates fell 3 basis points to 3.10% during the week. Rates have dropped 42 points from 3.52% last year. The average fee remained unchanged at 0.4 points.

According to Freddie Mac, the economy continues to recover slowly. All signs point to a solid recovery in home sales activity during the summer.

Low mortgage rates are a key factor in this recovery. While demand from home buyers is increasing and has been widespread across the states, supply has been slow to improve.

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

Mortgage Bankers Association rate

rates have been cited to be: “Data-reactid =” 44 “>For the week ending 29e May, rates have been cited to be:

  • Average interest rates on 30-year fixed rates, supported by the FHA, fell from 3.41 to 3.46%. Points went from 0.30 to 0.23 (including setup fees) for 80% LTV loans.
  • Average interest rates on 30-year fixed rates with compliant loan balances fell from 3.42% to 3.37%. Points increased from 0.33 to 0.30 (including setup fees) for LTV loans at 80%.
  • Average 30-year rates for jumbo loan balances fell from 3.71% to 3.66%. The number of points increased from 0.29 to 0.30 (including set-up costs) for LTV loans to 80%.

The refinancing index fell 9% from the previous week and was 137% higher than the same week a year ago. The previous week, the refinancing index was down 0.2%.

The refinancing share of mortgage activity increased from 62.6% to 59.5% of total applications during the week. In the previous week, the share had increased from 64.3% to 62.6% of the total number of requests.

According to the MBA:

  • Purchase requests continued their recent ascent, increasing 5% last week and 18% from a year ago.
  • The contained closure demand spurred recovery after the weekly declines seen earlier in the spring.
  • Despite this, many households are still affected by widespread job losses and the economic downturn.
  • High unemployment and weak housing supply could dampen a more significant rebound in short-term purchasing demand.
  • Refinancing requests fell for a 7e consecutive week. Earlier in the year, refinancing had peaked at 76% of total claims.

For the coming week

Key statistics include May inflation figures and weekly jobless claims figures. We expect the markets to cancel JOLT’s job openings for April.

The main event of the week is the Fed’s monetary policy decision on Wednesday. FOMC economic projections and FED interest rate projections will receive a lot of attention. Will there be additional monetary policy support? We’re not expecting talk of cutting rates to zero and interest rate projections will likely reflect this.

Delays in how long interest rates stay at current levels, however, and the Fed’s plans for unlimited purchases of government and mortgage bonds, will have an influence.

The data on trade outside of China at the start of the week will also be of great interest. Risk appetite may well boost Treasury yields to the north, with the EU and the United States offering a new wave of budget support.

On the geopolitical risk front, any chatter from Beijing or Washington will however influence the feeling of risk this week.

article originally published on FX Empire “data-reactid =” 66 “> This article was originally published on FX Empire

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