Mortgage rates change little due to COVID, economic data

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Mortgage rates have changed little last weekas the US economic recovery hit summer turbulence that slowed its hot spring momentum.

According to Freddie Mac’s Primary Mortgage Market Survey, 30-year fixed-rate mortgages fell to 2.86% during the week period ending Aug. 19. A week earlier, the average was 2.87%, and a year ago, the 30-year flat rate was 2.99%.

Last Consumer Sentiment Index and retail sales below expectations showed easing in July economic recovery, stifling any enthusiasm that might have caused a jump in rates. According to Zillow economist Matthew Speakman, the steadily growing number of new cases of COVID-19 represents a barrier to economic activity. Markets, meanwhile, may wait for the central bank to react to the July data before taking any steps.

“This data was released after the Federal Reserve last met and issued an official statement, so investors are eagerly awaiting signals on how and whether these reports could force the Fed to reconsider its alleged plans to tighten monetary policy towards the end. of the year. “Speakman said in a statement.

Meeting minutes from July meeting of the Federal Open Markets Committee gave a hint that some members think the economy may be close to the point where a decline in purchases of mortgage-backed securities and other purchases of bonds could begin as early as this year. But minutes released this week also showed the committee was well aware of the fragility of the economic recovery.

“Regarding the impact of the pandemic, several participants indicated that they would adjust their views on the appropriate path to purchase assets if the economic effects of new strains of the virus turn out to be significantly worse than currently expected and significantly hamper progress towards the committee’s goal,” it said. message.

Nonetheless, the housing market continues to maintain its growth trajectory, boosted this year by home buyers hoping to take advantage of favorable rates. Demand has led to limited supply and record price increases for both real estate on the market and new buildings

“Despite strong latent demand, low supply has driven prices up as shortages are limiting the volume of sales that would otherwise have occurred,” said Sam Hather, chief economist at Freddie Mac.

Other types of interest rates also showed minimal movement over the past week. The 15-year fixed rate mortgage rose one basis point to 2.16%, up from 2.15%. A year ago, over the same weekly period, the 15-year rate was 2.54%.

The five-year adjustable rate mortgage, indexed by the Treasury, dropped one basis point to 2.43% from 2.44% a week earlier. A year ago, the rate was 2.91%.



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