Mortgage rates returned to 3% for the first time since the week ending 14th April. Economic data and FOMC member commentary will influence in the week ahead.
It was just a 2nd weekly increase in 7-weeks for U.S mortgage rates in the week ending 20th May. Reversing a 2 basis points fall from the week prior, 30-year fixed rates rose by 6 basis points to 3.00%.
Compared to this time last year, 30-year fixed rates were down by 24 basis points.
30-year fixed rates were still down by 194 basis points since November 2018’s last peak of 4.94%.
Notably, mortgage rates returned to the 3% mark for the first time in five weeks.
It was a quiet first half of the week on the U.S economic calendar.
Key stats included NY Empire State Manufacturing figures for May and housing sector data for April.
In May, the NY Empire State Manufacturing Index fell from 26.3 to 24.3.
Housing sector numbers were also skewed to the negative.
Building permits rose by a modest 0.3% in April, following a 1.7% increase in March. Housing starts slid by 9.5%, following a 19.8% surge in March.
While the stats were on the lighter side, the FOMC meeting minutes on Wednesday supported a pickup in U.S Treasury yields.
Talk amongst members of a review of monetary policy, in light of the economic rebound, drove yields northwards.
The weekly average rates for new mortgages as of 20th May were quoted by Freddie Mac to be:
According to Freddie Mac,
For the week ending 14th May, the rates were:
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 1.2% in the week ending 14th May. In the week prior, the index had risen by 2.1%.
The Refinance Index rose by 4% and was 2% lower than the same week a year ago. The Index had risen by 3% in the week prior.
In the week ending 14th May, the refinance share of mortgage activity increased from 61.3% to 63.3%. The share had risen from 61.0 to 61.3% in the previous week.
According to the MBA,
It’s another quiet first half of the week on the U.S economic calendar. Consumer confidence figures for May are due out on Tuesday. A pickup in consumer confidence would support a further increase in yields following the latest FOMC meeting minutes.
On the monetary policy front, FOMC member chatter could also influence yields in the week ahead. With talk of a review of the FED’s current stance on monetary policy, the markets will be looking to get a sense of where the balance lies between the hawks and the doves.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.