US mortgage rates fell from 3%

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Mortgage rates fell again in the week ending 8th July

After declining 4 basis points from the previous week, 30-year fixed rates fell 8 basis points to 2.90%.

From 21st April’s 30-year mortgage rates just exceeded the 3% mark once before the current pullback.

Compared to the same period last year, 30-year fixed rates have decreased by 13 basis points.

30-year fixed rates are still down 204 basis points from the last peak in November 2018 of 4.94%.

Economic data for the week

On the US economic calendar, the first half of the week was calm.

Key statistics included ISM’s Top Non-Manufacturing Business Metrics for June and JOLT Job Openings in May.

Initial market indicators were mixed: ISM non-manufacturing PMI fell from 64.0 to 60.1.

For comparison, in May the number of vacancies increased from 9.193 million to 9.209 million. However, given the minutes of the FOMC meeting in the middle of the week, the statistics had little impact on the markets.

A mixed set of signals from the Fed of patience, but of the need to discuss a narrowing of the asset buying program, weighed on yields.

Market concerns about the pace of the global economic recovery also put pressure on riskier assets ahead of Friday’s recovery.

Freddie McRates

Average weekly rates on new mortgage loans by 8th July cited Freddie Mac be:

According to Freddie Mac,

  • Mortgage rates fell in response to a sharp jump in US Treasury yields.

  • While mortgage rates tend to be closely related to Treasury bond yields, they can also be influenced by other factors, including labor markets.

  • We expect that economic growth will gradually lead to higher interest rates.

  • Home buyers and refinancing borrowers still have the option to take advantage of 30-year rates, which are expected to continue hovering around 3%.

Rates of the Mortgage Bankers Association

For the week ended 2nd July tariffs we:

  • Average interest rates on 30-year fixed loan balances decreased from 3.20% to 3.15%. Points decreased from 0.39 to 0.38 (including processing fees) for LTV 80% loans.

  • Average 30-year fixed mortgage rates supported by the FHA fell from 3.19% to 3.17%. Points dropped from 0.34 to 0.32 (including creation fee) for loans with LTV 80%.

  • Average 30-year interest rates on large loan balances decreased from 3.23% to 3.20%. Points decreased from 0.33 to 0.28 (including creation fee) for 80% LTV loans.

Weekly data released by the Mortgage Bankers’ Association showed that the aggregate market index, which measures the volume of mortgage applications, fell 1.8% in the week ended 2.nd July. A week earlier, the index fell 6.9%.

The refinancing index fell 2% and was 8% lower than in the same week a year ago. The index was down 8% last week.

In the week ending 2nd In July, the share of refinancing mortgage activities fell from 61.9% to 61.6%. The share decreased from 62.5% to 61.9% in the previous week.

According to the MBA,

  • Activity on mortgage applications fell by 2nd week in a row, reaching its lowest level since early 2020.

  • Even as mortgage rates fell, the number of purchase and refinancing applications declined.

  • Treasury yields were volatile despite mostly positive economic news, including last week’s June employment report, which indicated further improvement in the labor market.

  • Although mortgage rates have dropped, many borrowers have previously refinanced at even lower rates.

  • Refinancing applications over the past 4 months have trending below 2020 levels.

A week ahead

Another quiet first half of the week. After the quiet end of the previous week, inflation figures for June will generate interest on Tuesday and Wednesday.

With lingering concerns about inflation, expect a strong impact from the numbers.

Aside from the economic calendar, news of COVID-19 and chatter from FOMC members also needs to be monitored throughout the week.

This article was originally listed on FX Empire

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