In the week ending May 5, mortgage rates rose for the eighth time in nine weeks.
30-year fixed rates jumped by 17 basis points to 5.27%. 30-year fixed rates slipped by one basis point in the week prior.
Year-on-year, 30-year fixed rates were up by 231 basis points.
30-year fixed rates were up by 33 basis points since November 2018’s last peak of 4.94%.
Economic Data from the Week
Private sector PMIs and nonfarm payrolls were the key stats in the first half of the week.
The numbers were dollar negative, with private sector PMI figures disappointing.
In April, the ISM Manufacturing PMI fell from 57.1 to 55.4, with the Non-Manufacturing PMI down from 58.3 to 57.1.
Labor market numbers were also dollar negative ahead of Friday’s NFP numbers. The ADP reported a 247k increase in nonfarm payrolls for April, falling short of forecasts, and a 479k rise in March.
While the stats were of interest, the Fed monetary policy decision and forward guidance were the key drivers in the week.
On Wednesday, the Fed delivered a 50-basis point rate hike, in line with forecasts. Fed Chair Powell also looked to calm the markets by assuring that 75 basis point hikes would not be on the table.
Freddie Mac Rates
The weekly average rates for new mortgages, as of May 3, 2022, were quoted by Freddie Mac to be:
According to Freddie Mac,
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Mortgage rates hit their highest level since 2009 as the upward trend resumed in the first week of May.
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House price growth will continue, though the pace of growth is expected to moderate due to affordability and inflationary pressures.
Mortgage Bankers’ Association Rates
For the week ending April 29, 2022, the rates were:
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Average interest rates for 30-year fixed with conforming loan balances fell from 5.37% to 5.36%. Points decreased from 0.67 to 0.63 (incl. origination fee) for 80% LTV loans.
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Average 30-year fixed mortgage rates backed by FHA decreased from 5.29% to 5.27%. Points fell from 0.88 to 0.85 (incl. origination fee) for 80% LTV loans.
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Average 30-year rates for jumbo loan balances increased from 4.89% to 4.92%. Points declined from 0.47 to 0.43 (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, increased 2.5% in the week ending April 29. The Index decreased by 8.3% in the previous week.
The Refinance Index rose by 0.2% and was 71% lower than the same week one year ago. In the week prior, the Index fell by 9%.
The refinance share of mortgage activity decreased from 35.0% to 33.9% of total applications. In the previous week, the share decreased from 35.7% to 35.0%.
According to the MBA,
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Treasury yields eased slightly last week, though held close to 4-year highs as the markets looked ahead to the Fed and its policy plans.
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Purchase applications increased, a positive sign for the sector’s peak spring home buying season.
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Low inventory levels and rising house prices remain housing sector negative for prospective home buyers.
For the week ahead
Inflation is back in the spotlight, with consumer inflation figures to draw investor interest on Wednesday.
Another spike in inflation would test support for riskier assets following the Fed’s forward guidance last week.
FOMC member chatter will also need monitoring along with trade data and inflation figures from China.
On the geopolitical risk front, the war in Ukraine will remain the area of focus.
This article was originally posted on FX Empire
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