In the week ending April 7, 2022, mortgage rates rose for a fifth consecutive week.
30-year fixed rates rose by 5 basis points to 4.72%. 30-year fixed rates surged by 25 basis points in the week prior. It was the highest mortgage rate since 4.75% on December 5, 2018.
Year-on-year, 30-year fixed rates were up by 159 basis points.
30-year fixed rates were down by 22 basis points since November 2018’s last peak of 4.94%.
Economic Data from the Week
In the first half of the week, the focus was on factory orders and service sector PMIs.
The stats were mixed. Factory orders fell by 0.5% in February, partially reversing a 1.5% rise from January, while service sector activity improved.
In March, the market’s preferred ISM Non-Manufacturing PMI increased from 56.5 to 58.3.
With the stats dollar positive, the FOMC meeting minutes were also dollar positive mid-week. More hawkish than anticipated minutes drove U.S Treasury yields northwards. The minutes revealed plans to begin cutting the FED balance sheet by $95bn per month amidst a rising interest rate environment to curb inflation.
Freddie Mac Rates
The weekly average rates for new mortgages, as of April-7, 2022, were quoted by Freddie Mac to be:
According to Freddie Mac,
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Mortgage rates have seen the fastest 3-month rise since May 1994.
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Increased mortgage rates have hit purchase demand.
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Monthly payments for those looking to buy a home have risen by at least 20% from a year ago.
Mortgage Bankers’ Association Rates
For the week ending April 1, 2022, the rates were:
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Average interest rates for 30-year fixed with conforming loan balances rose from 4.80% to 4.90%. Points decreased from 0.56 to 0.53 (incl. origination fee) for 80% LTV loans.
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Average 30-year fixed mortgage rates backed by FHA increased from 4.66% to 4.90%. Points fell from 0.71 to 0.68 (incl. origination fee) for 80% LTV loans.
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Average 30-year rates for jumbo loan balances increased from 4.40% to 4.51%. Points declined from 0.44 to 0.34 (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, declined 6.3% in the week ending April-01. The Index fell by 6.8% in the previous week.
The Refinance Index slid by 10% and was 62% lower than the same week one year ago. In the week prior, the Index tumbled by 15%.
The refinance share of mortgage activity decreased from 40.6% to 38.8% of total applications. In the previous week, the share fell from 44.8% to 40.6%.
According to the MBA,
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Mortgage application volume continues to fall due to the upswing in mortgage rates, driven by sentiment towards monetary policy.
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As higher rates reduce the incentive to refinance, application volume fell to its lowest since Spring 2019.
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Strong labor market conditions and wage growth have supported housing demand despite surging mortgage rates and house price appreciation.
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Inventories continue to peg back purchase activity, however.
For the week ahead
The week kicks off with inflation figures due out on Tuesday. Expect plenty of market sensitivity to the numbers following last week’s hawkish FOMC meeting minutes.
On Wednesday, wholesale inflation figures will also draw interest ahead.
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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