Mortgage rates hit reverse for the first time in 4-weeks.
In spite of the decline, 30-year fixed rates stood above the 3% line for the 6th time since 21st April.
In the week ending 4th November, 30-year fixed rates decreased by 5 basis points to 3.09%.
Compared to this time last year, 30-year fixed rates were up by 31 basis points.
30-year fixed rates were still down by 175 basis points since November 2018’s last peak of 4.94%.
Economic Data from the Week
It was a busy first half of the week on the U.S economic calendar.
The market’s preferred ISM private sector PMIs and the ADP’s nonfarm employment figures were key stats early in the week.
While manufacturing sector activity saw slightly slower growth, a marked pickup in service sector activity was market positive.
In October, the ISM Manufacturing PMI fell from 61.1 to 60.8. The Non-Manufacturing PMI, by contrast, jumped from 61.9 to 66.7.
On the employment front, the ADP numbers were also upbeat ahead of the official numbers on Friday.
In October, nonfarm payrolls increased by 571k, following on from a 523k rise in September.
While the stats were skewed to the positive, it was the FED’s monetary policy decision and forward guidance that garnered the greatest interest.
In line with market expectations, the FED delivered on the tapering front. Uncertainty over whether the FED need to address inflationary pressure were also addressed, however. The FED Chair stood by the transitory script, taking rate hikes off the table near-term.
Freddie Mac Rates
The weekly average rates for new mortgages as of 4th November were quoted by Freddie Mac to be:
According to Freddie Mac,
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While mortgage rates fell after several weeks on the rise, expectations are for further increases due to economic data and a FED pullback on stimulus.
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The housing market remains favorable for consumers, however, as rates remain below pre-pandemic levels and continue to support sustainable purchase and refinance opportunities.
Mortgage Bankers’ Association Rates
For the week ending 29th October, the rates were:
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Average interest rates for 30-year fixed with conforming loan balances decreased from 3.30% to 3.24%. Points remained unchanged at 0.34 (incl. origination fee) for 80% LTV loans.
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Average 30-year fixed mortgage rates backed by FHA fell from 3.31% to 3.29%. Points remained unchanged at 0.38 (incl. origination fee) for 80% LTV loans.
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Average 30-year rates for jumbo loan balances decreased from 3.34% to 3.29%. Points fell from 0.29 to 0.27 (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, decreased by 3.3% in the week ending 29th October. In the previous week, the index had increased by 0.3%.
The Refinance Index declined by 4% and was 33% lower than the same week a year ago. In the week prior, the index had fallen by 2%.
The refinance share of mortgage activity decreased from 62.2% to 61.9% in the week ending 29th October. In the previous week, the share had fallen from 63.3% to 62.2% of total applications.
According to the MBA,
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Mortgage rates decreased for the first time since August.
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Concerns about supply-chain bottlenecks, waning consumer confidence, weaker economic growth, and rising inflation pushed yields lower.
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Refinance applications declined to the lowest level since Jan-2020, with the overall share falling to the lowest since Jul-2021.
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Government refinance applications fell for the 6th straight week, as it becomes evident that an increasing number of borrowers have already refinanced.
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High prices and low for-sale inventory continue to peg back purchase activity. Current applications, however, still point to healthy housing demand.
For the week ahead
It’s a quieter first half of the week on the U.S economic calendar.
The stats will influence, however, with inflation back in the limelight.
On Tuesday, wholesale inflation figures will be in focus ahead of consumer prices on Wednesday.
Expect both sets of numbers to have an impact on yields in the first half of the week.
Central bank chatter will also provide direction.
From China, trade data from the weekend and inflation figures on Wednesday will also impact market risk sentiment.
This article was originally posted on FX Empire
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