US Mortgage Rates Stable Ahead Of Jackson Hole Symposium



Mortgage rates have dropped after rising in just 2 years.nd every 7 weeks in the previous week.

Week Ending 19th 30-year fixed rates fell 1 basis point to 2.86%. Mortgage rates had jumped 10 basis points the week before.

Rates on 30-year mortgages have only exceeded the 3% mark once since the age of April.

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

30-year fixed rates are still down 208 basis points from the last peak in November 2018 of 4.94%.

Economic data for the week

The first half of the week was relatively busy in terms of economic data. Key statistics from the US included New York State manufacturing data, manufacturing data, and retail sales.

The statistics were skewed in the negative: retail sales fell 1.0% in July against the forecasted decline of 0.3%. In June, retail sales rose 0.7%.

In August, the NY Empire State industrial production index fell from 43.0 to 18.3% against the forecasted fall to 29.0.

In terms of monetary policy, the FOMC meeting minutes revealed an increase in debate over the move to an asset purchase program. After an impressive number of NFP jobs, FOMC members chatter during the week put pressure on riskier assets, with members talking about the need to take a step.

Elsewhere, economic data from China added to fears of an economic recovery earlier in the week.

Fixed investment rose 6.4% in July compared to 8.3% in June. Retail sales were up 8.5% from 12.6% in June.

Freddie Mac Rates

Average weekly rates on new mortgage loans by 19th August were quoted Freddie Mac to be:

  • 30-year fixed rates fell 1 basis point to 2.86% over the week. This time last year the rates were 2.99%. The average commission remained unchanged and amounted to 0.7 points.
  • The 15-year fixed was up 1 basis point 2.16% over the week. Rates were down 38 basis points from 2.54% a year ago. The average commission fell from 0.7 points to 0.6 points.
  • Five-year fixed rates fell 1 basis point to 2.43%. Rates fell 48 points from 2.91% a year ago. The average commission was stable at 0.3 points.

According to Freddie Mac,

  • Mortgage rates have remained relatively unchanged throughout the week. Housing is in the same phase of the economic cycle as many other consumer goods.
  • Despite strong latent demand, low supply has driven prices up as scarcity limits the amount of sales that would otherwise have occurred.

Rates of the Mortgage Bankers Association

For the week ended 13th August rates we:

  • Average interest rates for 30-year fixed loans with corresponding loan balances increased from 2.99% to 3.06. Points increased from 0.30 to 0.34 (including processing fees) for LTV loans of 80%.
  • Average 30-year fixed mortgage rates, backed by the FHA, rose from 3.06% to 3.15%. Points increased from 0.27 to 0.31 (including creation fee) for 80% LTV loans.
  • Average 30-year interest rates on large loan balances increased from 3.15% to 3.19%. Points decreased from 0.29 to 0.26 (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 applications for mortgages, declined 3.9% in the week ending March August. A week earlier, the index rose 2.8%.

The refinancing index fell 5% and was 8% lower than a week earlier. The index rose 3% last week.

Week Ending 13th In August, the share of refinancing mortgage activities decreased from 68.0% to 67.3%. The share increased from 67.6% to 68.0% a week earlier.

According to the MBA,

  • Mortgage rates were at their highest in about a month, with the 30-year fixed rate topping 3.0%.
  • Rates followed a general rise in Treasury yields last week that started high thanks to the July jobs report and then slowed in response to weaker consumer sentiment and concerns over COVID-19.
  • Buy orders showed mixed results, and despite declining for the second straight week, average loan sizes remain close to record levels.
  • This is a constant sign that selling prices are still high, driven by fierce competition leading to faster growth in house prices.

A week ahead

The focus is on preliminary August private sector PMIs on Monday and major durable goods orders on Tuesday.

Expect the services PMI and major durable goods orders to be key in the economic calendar.

In terms of monetary policy, the chatter of FOMC members ahead of the Fed’s Jackson Hole symposium will also have a significant impact on profitability.


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