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Mortgage rates avoided a fall to yet another all-time low in the week ending 29th October. Following a 1 basis point fall in the week prior, the 30-year fixed rate rose by 1 basis point to 2.81%.
Compared to this time last year, 30-year fixed rates were down by 97 basis points.
30-year fixed rates were also down by 213 basis points since November 2018’s most recent peak of 4.94%.
Economic Data from the Week
Economic data was on the lighter side in the 1st half of the week.
Key stats included durable goods and core durable goods orders for September and October consumer confidence figures.
It was a mixed bag on the data front.
While both durable goods and core durable goods orders rose in September, consumer confidence softened in October.
The stats had a muted impact on the broader market, however, with a surge in new COVID-19 cases weighing on risk appetite.
With a number of EU member states reintroducing lockdown measures, the fear is that the U.S may have to follow.
On the geopolitical risk front, market jitters ahead of the U.S Presidential Election next week also weighed on riskier assets.
Freddie Mac Rates
The weekly average rates for new mortgages as of 29th October were quoted by Freddie Mac to be:
- 30-year fixed rates increased by 1 basis points to 2.81% in the week. Rates were down from 3.75% from a year ago. The average fee rose from 0.6 points to 0.7 points.
- 15-year fixed rates fell by 1 basis points to 2.32% in the week. Rates were down from 3.19% compared with a year ago. The average fee held steady at 0.6 points.
- 5-year fixed rates increased by 1 basis points to 2.88% in the week. Rates were down by 55 points from last year’s 3.43%. The average fee remained unchanged at 0.3 points.
According to Freddie Mac,
- The record-low mortgage rate environment is providing tangible support to the economy at a critical time.
- Strong purchase demand is helping to lift the construction, manufacturing, and transportation industries.
- Homeowners, looking to sell or make home improvements, are also supporting consumption
- On the refinance front, many consumers are smartly taking advantage of the ability to lower their monthly payments. This means that homeowners can spend, save, or pay down debt more so than in the past.
Mortgage Bankers’ Association Rates
For the week ending 23rd October, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, increased from 3.12% to 3.14%. Points remained unchanged 0.35 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances decreased from 3.02% to 3.00%. Points fell from 0.36 to 0.35 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances decreased from 3.33% to 3.28%. Points increased from 0.30 to 0.31 (incl. origination fee) for 80% LTV loans.
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, increased by 1.7% in the week ending 23rd October. In the week prior, the index had slipped by 0.6%.
The Refinance Index increased by 3% and was 80% higher than the same week a year ago. In the week prior, the index had risen by 0.2%.
The refinance share of mortgage activity increased from 66.1% to 66.7%. In the previous week, the share had risen from 65.6% to 66.1%.
According to the MBA,
- While mortgage rates were flat compared to the week prior, overall activity remains strong this fall.
- Applications jumped 24% compared to last year, with the average loan size reaching a record-high of $372,600.
- Housing inventory shortages have pushed national house prices considerably higher on an annual basis.
- Refinance activity has been on the more volatile side in the past few months.
For the week ahead
It’s a busier 1st half of the week on the U.S economic calendar.
Key stats include the market’s preferred ISM Manufacturing and Non-Manufacturing PMIs and ADP nonfarm employment change figures.
Factory orders are also in focus but will likely be overshadowed by the private sector PMIs and labor market numbers.
The main event, in the 1st half of the week, is the U.S Presidential Election, however.
Expect plenty of market volatility that will influence U.S Treasury yields and ultimately mortgage rates.
With the election the key driver, COVID-19 updates will also provide direction. Any suggestions of a reintroduction of lockdown measures across badly affected U.S states would further test risk appetite.
This article was originally posted on FX Empire