US mortgage rates returned to above 3% for the first time since April



Mortgage rates increased by 4th time at 9 weeks in the week ending 24th June.

Overcoming the 3 basis point decline from the previous week, 30-year fixed rates increased 9 basis points to 3.02%.

From 21st Interest rates on 30-year mortgages for April failed to rise above the 3% mark before the latest hike.

Compared to last year, 30-year fixed rates are down 11 basis points.

30-year fixed rates are still down 192 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 quieter.

Housing data was in the spotlight on Tuesday ahead of preliminary June private sector PMI data on Wednesday.

The statistics for the week were distorted in the negative direction, but this was not enough to keep rates on mortgage loans.

Secondary home sales fell 0.9% in May after falling 2.7% in April. While negative but scarce stocks likely contributed to the decline.

However, more significant during the week was the slowdown in the service sector in June.

The services PMI fell from 70.4 to 64.8, while the manufacturing PMI rose from 62.1 to 62.6. As a result of the decline in the service PMI, the composite PMI fell from 68.7 to 63.9.

While the statistics were skewed towards the negative, market reaction to FOMC forecasts in the previous week supported the rise in mortgage rates.

Freddie McRates

Average weekly rates on new mortgage loans by 24th June cited Freddie Mac be:

According to Freddie Mac,

  • Mortgage rates rose above 3% for the first time in 10 weeks.

  • As the economy develops and inflation remains high, rates are likely to continue to gradually rise until the end of the year.

  • For those homeowners who haven’t refinanced yet and there are many borrowers left to benefit from it, now is the time.

Rates of the Mortgage Bankers Association

A week before 18th June tariffs we:

  • Average interest rates on 30-year fixed balances increased from 3.11% to 3.18%. Points increased from 0.36 to 0.48 (including processing fees) for LTV 80% loans.

  • Average 30-year fixed mortgage rates, backed by the FHA, rose from 3.14% to 3.21%. Points increased from 0.33 to 0.34 (including processing fees) for loans with LTV 80%.

  • Average 30-year interest rates on large loan balances increased from 3.20% to 3.26%. Points decreased from 0.46 to 0.44 (including processing fees) for LTV 80% loans.

Weekly data released by the Mortgage Bankers’ Association showed that the Market Composite Index, which measures the volume of applications for mortgages, rose 2.1% in the week ended June. A week earlier, the index rose 4.2%.

The refinancing index rose 3% and was 9% lower than in the same week a year ago. The index rose 6% last week.

Week Ending 18th In June, the share of refinancing mortgage activities increased from 61.7% to 62.5%. The share increased from 60.4% to 61.7% in the previous week.

According to the MBA,

  • Mortgage rates have risen to their maximum level in a month.

  • Despite the growth, refinancing increased for the second week in a row.

  • Over the past few weeks, buy orders have reappeared on an upward trend.

  • Activity was slightly higher for 3rd week in a row, but remained lower than the same week a year ago.

A week ahead

The first half of the week is more busy. June consumer confidence data will be in the spotlight ahead of ADP non-farm employment change data on Wednesday.

Expect both sets of numbers to give direction on yields and ultimately mortgage rates.

In terms of monetary policy, the chatter of FOMC members will also have an impact at the start of the week.

Elsewhere, private sector PMI data from China will also provide riskier assets and returns with direction for the week.

This article was originally listed on FX Empire



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