Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
Bob Mason
For sale sign in front of large USA home

Mortgage rates fell to a 16th record low of the year after a 4 basis points fall to a 15th record low in the previous week.

Compared to this time last year, 30-year fixed rates were down by 108 basis points.

30-year fixed rates were also down by 228 basis points since November 2018’s most recent peak of 4.94%.

Economic Data from the Week

Economic data was on the busier side in the 1st half of the week.

November personal spending, inflation, and core durable goods orders, together with consumer confidence and jobless claims figures were in focus.

It was a mixed bag on the economic data front. Consumer confidence waned in December, while initial jobless claims fell from 892k to 805k.

The annual rate of core inflation held steady at 1.4%, while personal spending fell by a larger than expected 0.4%.

Durable goods and core durable goods orders continued to rise, however, following October’s jump, supporting riskier assets.

From Capitol Hill, progress towards a COVID-19 stimulus package was risk positive, while continued concerns over COVID-19 and news of new strains tested support in the week.

Later in the week, U.S President Trump refused to sign the COVID-19 stimulus package. Hopes of a better package supported riskier assets mid-week before news of lawmakers refusing Trump’s demands hit the wires.


Freddie Mac Rates

The weekly average rates for new mortgages as of 24th December were quoted by Freddie Mac to be:

  • 30-year fixed rates fell by 1 basis point to a new low of 2.66% in the week. This time last year, rates stood at 3.74%. The average fee remained steady at 0.7 points.
  • 15-year fixed rates fell by 2 basis points to 2.19% in the week. Rates were down by 100 basis points from 3.19% a year ago. The average fee fell from 0.6 points to 0.5 points.
  • 5-year fixed rates held steady at 2.79% for a 2nd consecutive week. Rates were down by 66 points from 3.45% a year ago. The average fee fell from 0.3 points to 0.2 points.

According to Freddie Mac,

  • The housing market is set to finish the year strong as low mortgage rates continue to fuel homebuyer demand.
  • Refinance activity also remains robust with mortgage rates at record lows.
  • Looking ahead to 2021, Freddie Mac expects rates to hold steady. A key driver, in the near-term, however, will be the trajectory of the COVID-19 pandemic and the execution of the vaccine.

Mortgage Bankers’ Association Rates

For the week ending 18th December, the rates were:

  • Average interest rates for 30-year fixed to conforming loan balances increased from 2.85% to 2.86%. Points remained unchanged at 0.33 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed, backed by the FHA, decreased from 2.96% to 2.90%. Points fell from 0.42 to 0.32 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances decreased from 3.12% to 3.10%. Points decreased from 0.33 to 0.29 (incl. origination fee) for 80% LTV loans.

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 0.8% in the week ending 18th December. In the week prior, the Index had risen by 1.1%.

The Refinance Index increased by 4% and was 124% higher than the same week a year ago. In the week prior, the index had risen by 1%.

The refinance share of mortgage activity rose from 72.7 to 74.8%. In the previous week, the share had increased from 72.0% to 72.7%.

According to the MBA,

  • Mortgage rates are closing the year at record lows, with the 30-year fixed rate – at 2.86% – a full percentage point below a year ago.
  • Purchase applications fell for the 2nd time in 3-weeks, though remained 26% higher than the same week a year ago.
  • The average loan balance reached another record high.

Numbers for the week ending 25th December and 1st January will be available on 6th January 2021.

For the week ahead

It’s a relatively quiet 1st half of a shortened week on the U.S economic calendar.

Key stats include November trade data and December Chicago PMI figures. We don’t expect too much influence from the stats, however.

COVID-19 news updates and market sentiment towards the COVID-19 stimulus package will likely remain key drivers.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.