Mortgage rates fall to yet another record low. COVID-19 vaccine news could influence, with the outlook for interest rates weighing.
Mortgage rates fell to a 14th record low of the year, after having held steady in the previous week. In the week ending 3rd December, 30-year fixed rates slipped by 1 basis point to 2.71%.
From this time last year, 30-year fixed rates were down by 97 basis points.
30-year fixed rates were also down by 223 basis points since November 2018’s most recent peak of 4.94%.
Economic data was on the quieter side in the 1st half of the week.
The market’s preferred ISM Manufacturing and ADP nonfarm employment change figures for November were in focus.
The stats were negative, with the ISM Manufacturing PMI falling from 59.3 to 57.5. Labor market indicators also continued to flash red, with the ADP reporting just 307k nonfarm payroll jobs added in November. Economists had forecast a 410k rise in nonfarm payrolls.
Away from the economic calendar, progress towards a COVID-19 vaccine failed to support mortgage rates in the week. The FED’s outlook on close to zero interest rates weighed on mortgage rates, as mortgage and refinance applications continued to defy gravity.
The weekly average rates for new mortgages as of 3rd December were quoted by Freddie Mac to be:
According to Freddie Mac,
For the week ending 27th November, rates were quoted to be:
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, slipped by 0.6% in the week ending 27th November. In the week prior, the Index had increased by 3.9%.
The Refinance Index decreased by 5% and was 102% higher than the same week a year ago. In the week prior, the Index had increased by 5%.
The refinance share of mortgage activity fell from 71.1% to 69.5%. The share had risen from 69.8% to 71.1% in the week prior.
According to the MBA,
It’s a relatively quiet 1st half of the week on the U.S economic calendar.
Key stats include 3rd quarter nonfarm productivity and unit labor costs and October JOLTs job openings. With the market focus on U.S stimulus talks on Capitol Hill and COVID-19 vaccine news updates, the stats would likely have a muted impact on yields.
The key drivers in the week will likely be COVID-19 vaccine production projections and the FDA’s decision on Pfizer Inc. and Moderna Inc.’s vaccines.
Expect a jump in demand for riskier assets and U.S Treasury yields if lawmakers pass a COVID-19 stimulus package.
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.