Mortgage rates were on the rise again, holding onto 3% levels for the 5th time since 21st April.
In the week ending 28th October, 30-year fixed rates increased by 5 basis points to 3.14%.
Compared to this time last year, 30-year fixed rates were up by 33 basis points.
30-year fixed rates were still down by 180 basis points since November 2018’s last peak of 4.94%.
Economic Data from the Week
It was a busier first half of the week on the U.S economic calendar.
Consumer confidence and core durable goods orders were key stats early in the week.
The numbers were skewed to the positive, with consumer confidence seeing a marked improvement.
In October, the CB Consumer Confidence Index rose from 109.8 to 113.8.
Core durable goods increased by 0.4% following a 0.3% rise in August, which was also market positive.
With persistent inflationary pressure, the numbers supported U.S Treasury yields, as the markets looked ahead to the FED policy decision this coming week.
Freddie Mac Rates
The weekly average rates for new mortgages as of 28th October were quoted by Freddie Mac to be:
According to Freddie Mac,
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The yield on the 10-year Treasury note has been trending up due to the decline in new COVID-19 cases.
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Also contributing has been improving consumer confidence and broadening inflation and persistent shortages.
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While mortgage rates are rising, purchase demand remains firm, showing that latent purchase demand exists among consumers.
Mortgage Bankers’ Association Rates
For the week ending 22nd October, the rates were:
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Average interest rates for 30-year fixed with conforming loan balances increased from 3.23% to 3.30%. Points decreased from 0.35 to 0.34 (incl. origination fee) for 80% LTV loans.
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Average 30-year fixed mortgage rates backed by FHA rose from 3.17% to 3.31%. Points increased from 0.32 to 0.38 (incl. origination fee) for 80% LTV loans.
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Average 30-year rates for jumbo loan balances increased from 3.26% to 3.34%. Points fell from 0.33 to 0.29 (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 0.3% in the week ending 22nd October. In the previous week, the index had fallen by 6.3%.
The Refinance Index declined by 2% and was 26% lower than the same week a year ago. In the week prior, the index had tumbled by 7%.
The refinance share of mortgage activity fell from 63.3% to 62.2% in the week ending 22nd October. In the previous week, the share had fallen from 63.9% to 63.3% of total applications.
According to the MBA,
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Mortgage rates increased again last week, as the 30-year fixed rate and the 15-year fixed rate hit their highest levels in 8-months.
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As a result of the uptrend, refinance activity fell for a 5th straight week to its slowest weekly pace since Jan-2020.
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Higher rates continue to reduce borrowers’ incentive to refinance.
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Purchase applications picked up slightly, and the average loan size rose to its highest level in 3-weeks.
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Growth in the higher price segments continues to dominate purchase activity.
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Last month, both new and existing home sales were at their strongest sales pace since early in the year.
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First-time home buyers are accounting for a declining share of activity, however.
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Home prices are still growing at a rapid clip, even if monthly growth rates are showing signs of moderation.
For the week ahead
It’s a busier first half of the week on the U.S economic calendar.
At the start of the week, ISM Manufacturing PMI numbers will set the tone. While the headline figure will be key, the inflation, employment, and new orders sub-components will also influence.
On Wednesday, the focus will then shift to ADP nonfarm employment change figures and the ISM Non-Manufacturing PMI.
Both sets of numbers will also provide direction.
The main event of the week, however, will be the FED monetary policy decision on Wednesday. Tapering and the FED’s outlook on inflation and interest rates will be key…
This article was originally posted on FX Empire
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