In the week ending March 31, 2022, mortgage rates rose sharply for a third consecutive week.
30-year fixed rates jumped by 25 basis points to 4.67%. 30-year fixed rates surged by 26 basis points in the week prior. It was the highest mortgage rate since December 2018.
Year-on-year, 30-year fixed rates were up by 149 basis points. 30-year fixed rates were down by 24 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. Consumer confidence, private sector PMIs, and ADP nonfarm payroll figures were in focus.
The stats were skewed to the positive, supporting Fed Chair Powell’s willingness to lift rates at a more aggressive pace.
With inflation already at 40-year highs, China’s latest lockdown measures and Russia’s invasion of Ukraine suggest inflation will go even higher. Such an eventuality would force the Fed to more aggressively rein in inflation, which would translate into higher mortgage rates.
Freddie Mac Rates
The weekly average rates for new mortgages, as of March-31, 2022, were quoted by Freddie Mac to be:
According to Freddie Mac,
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Mortgage rates rose once more amidst the current inflation environment.
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Ongoing supply chain disruptions and demand for goods are likely to push inflation higher yet.
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Purchase demand has softened but outpaces expectations.
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First-time homebuyer demand and those waiting for rates to fall to cyclical lows continue to support the housing market.
Mortgage Bankers’ Association Rates
For the week ending March 25, 2022, the rates were:
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Average interest rates for 30-year fixed with conforming loan balances rose from 4.50% to 4.80%. Points decreased from 0.59 to 0.56 (incl. origination fee) for 80% LTV loans.
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Average 30-year fixed mortgage rates backed by FHA increased from 4.40% to 4.66%. Points fell from 0.73 to 0.71 (incl. origination fee) for 80% LTV loans.
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Average 30-year rates for jumbo loan balances increased from 4.11% to 4.40%. Points declined from 0.51 to 0.44 (incl. origination fee) for 80% LTV loans.
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, a measure of mortgage loan application volume, fell by 6.8% in the week ending March-25. The Index slid by 8.1% in the previous week.
The Refinance Index tumbled by 15% and was 60% lower than the same week one year ago. In the week prior, the Index slid by 14%.
The refinance share of mortgage activity fell from 44.8% to 40.6% of total applications. In the previous week, the share declined from 48.4% to 44.8%.
According to the MBA,
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Mortgage rates hit their highest level in more than three years, driven by sentiment towards Fed monetary policy.
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Refinance applications continued to fall, with application volume down 60% from last year’s levels.
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Purchase application volumes were largely unchanged despite the jump in mortgage rates.
For the week ahead
In the first half of the week, the market’s preferred ISM Non-Manufacturing PMI for March will be the key stat.
Other stats include U.S factory orders, trade data, and Markit survey-based service and composite PMIs. We don’t expect these numbers to have a material impact, however.
Upward pressure will come from last week’s nonfarm payrolls that were a green light for the Fed to take a more aggressive path to curb inflation.
On the monetary policy front, the FOMC meeting minutes on Wednesday will also influence.
Away from the economic data, Russia and Ukraine will remain an area of focus for the global financial markets.
This article was originally posted on FX Empire
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