U.S Mortgage Rates – FED Chair Powell Pins Mortgage Rates BackMortgage rates held steady as FED Chair Powell offset the effects of the previous week’s NFP numbers on Treasury yields…
Mortgage rates were flat in the week, following just a 2nd weekly rise in 8 weeks in the week prior. In the week ending 11th July, 30-year fixed rates held steady at 3.75% following a 2 basis point rise from the previous week. That left 30-year rates close the lowest level since late 2016 according to figures released by Freddie Mac.
Compared to this time last year, 30-year fixed rates were down by 78 basis points.
More significantly, 30-year fixed rates are down by 119 basis points since last November’s most recent peak of 4.94%.
Economic Data from the Week
Key stats out of the U.S through the 1st half of the week were on the lighter side.
JOLTs job opening numbers for May had a muted impact on yields at the start of the week. The lack of stats left the markets to respond to Friday’s NFP numbers and look ahead to Powell’s 2-days of testimony.
The first day of FED Chair Powell’s testimony weighed on U.S Treasury yields on Wednesday. The FED Chair continued to talk of downside risks and the FED’s willingness to provide support should the need arise.
With economic indicators softening, this was good enough for the markets. Yields reversed, which weighed on the Dollar, whilst supporting the U.S equity markets.
Late on Wednesday, the FOMC meeting minutes were of less of an influence, with Powell’s testimony fresh off the press.
Freddie Mac Rates
The weekly average rates for new mortgages as of 11th July were quoted by Freddie Mac to be:
- 30-year fixed rates remained unchanged at 3.75% in the week. Rates were down from 4.53% from a year ago. The average fee fell from 0.6 to 0.5 points.
- 15-year fixed rates rose by 4 basis point to 3.22% in the week. Rates were down from 4.02% from a year ago. The average fee held steady at 0.5 points.
- 5-year fixed rates increased by 1 basis point to 3.46% in the week. Rates were down by 40 basis points from last year’s 3.86%. The average fee held steady at 0.4 points.
The lack of movement in mortgage rates came as economic data out of the U.S saw some improvement, whilst the FED assured of monetary policy support as downside risks to the economy continued to build.
Mortgage Bankers’ Association Rates
For the week ending 5th July, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, remained unchanged at 3.97%. Points also remained unchanged at 0.30 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances decreased from 4.07% to 4.04%. Points increased from 0.36 to 0.37 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances increased from 4.00% to 4.03%. Points increased from 0.25 to 0.27 (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, fell by 2.4% in the week ending 5th July. The fall followed on from a 0.1% fall in the week ending 28th June.
The Refinance Index fell by 7% in the week ending 5th July. The Index fell by 1% in the previous week ending 28th June.
The share of refinance mortgage activity decreased from 51.0% to 48.7%, following on from a fall from 51.5 to 51.0% in the week prior.
According to the MBA, applications were down slightly, with purchases and refinance applications moving in opposite directions in the week. Borrowers have been less sensitive to low rates as many have either refinanced or are waiting for rates to fall further.
For the week ahead
It’s a relatively busy first half of the week ahead.
July NY Empire State Manufacturing figures will kick things off at the start of the week, which are forecasted to be yield positive.
The market focus will then shift to June retail sales figures due out on Tuesday. Retail sales will need to impress to provide any upside to yields. Industrial production and business inventory numbers will also be in focus on the day.
Housing sector figures due out on Wednesday will likely have a relatively muted impact on yields…
Outside of the numbers
Earnings season kicks in, with the big banks in focus. Disappointing earnings would likely overshadow any positive numbers on Tuesday.
On the geopolitical front, the markets will be looking for any progress on the U.S – China trade talks and there’s also Iran to consider.