Mortgage rates held steady in the week, with the effects of hawkish FED Chair Powell testimony cancelled out by market concerns over the Omicron strain...
Mortgage rates rose for just the 2nd time in 5-weeks after having held steady in the week prior.
A modest increase ensured that 30-year fixed rates continued to sit above the 3% mark after the Thanksgiving holidays.
In the week ending 2nd December, 30-year fixed rates rose by 1 basis point to 3.11%.
Compared to this time last year, 30-year fixed rates were up by 40 basis points.
30-year fixed rates were still down by 183 basis points, however, since November 2018’s last peak of 4.94%.
It was a busy 1st half of the week, with economic data and monetary policy in focus.
On the economic data front, the stats were mixed in the early part of the week.
In November, the CB Consumer Confidence Index fell from 111.6 to 109.5, with inflation and COVID-19 weighing.
Mid-week, ADP nonfarm employment change and manufacturing sector PMIs were positive, however.
For November, the ADP reported a 534k increase in nonfarm payrolls after having risen by 570k in October.
According to the ISM survey, the manufacturing PMI rose from 60.8 to 61.1.
Early in the week, FED Chair Powell also delivered 2-days of testimony on Capitol Hill. Powell talked of the need to discuss accelerating the tapering of bond purchases at the next FOMC meeting. The FED Chair also said that the FED should end the use of transitory when referencing the current spike in inflation.
While the stats and FED Chair Powell’s comments were supportive of a pickup in yields, concerns over COVID-19 tempered a breakout.
Uncertainty over the efficacy of existing vaccines against the new Omicron strain weighed on market risk appetite in the week.
The weekly average rates for new mortgages as of 2nd December were quoted by Freddie Mac to be:
According to Freddie Mac,
For the week ending 26th November, 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, decreased by 7.2% in the week ending 26th November. In the previous week, the index had increased by 1.8%.
The Refinance Index slid by 15% and was 41% lower than the same week one year ago. In the week prior, index had increased by 0.4%.
The refinance share of mortgage activity decreased from 63.1% to 59.4%. In the previous week, the share had increased from 62.9% to 63.1%.
According to the MBA,
It’s a quiet first half of the week on the U.S economic calendar.
On Tuesday, nonfarm productivity and unit labor costs will be in focus alongside trade data. The numbers are unlikely to have a material impact on 10-year Treasury yields and mortgage rates, however.
JOLT’s job openings on Wednesday, will likely garner greater interest following disappointing NFP numbers from last Friday.
Away from the economic calendar, however, COVID-19 news updates will continue to influence.
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.