Mortgage rates fall to a new record low, bringing sub-3% into play. Concerns over COVID-19 and its impact on the economy led rates downwards.
Mortgage rates fell to an all-time record low in the week ending 2nd July. The weekly decline came off the back of a hold in the previous week.
30-Year fixed rates fell by 6 basis points to an all-time low 3.07%. In the previous week, 30-year fixed rates had held steady at 3.13%.
Compared to this time last year, 30-year fixed rates were down by 68 basis points.
30-year fixed rates were also down by 187 basis points since November 2018’s most recent peak of 4.94%.
Economic data was on the busier side through the 1st half of the week.
Key stats included consumer confidence, labor market, and private sector PMI figures for June.
Both the ADP and official government figures reported a sizeable jump in nonfarm payrolls in June. The official government figures revealed a record 4.8m increase in nonfarm payrolls, following 2.699m in May.
As a result of the jump in nonfarm payrolls, the U.S unemployment rate fell from 13.3% to 11.1%.
Consumer confidence was also on the rise, with the CB Consumer Confidence Index up from 85.9 to 98.1.
From the private sector, the numbers were also positive. The Chicago PMI rose from 32.1 to 42.1, with the IMS Manufacturing PMI increasing from 43.1 to 52.6.
The only negative from the week was another 1.427m rise in the weekly jobless claims.
While the stats were skewed to the positive, a continued rise in new COVID-19 cases raised more red flags. In recent weeks, a number of U.S states have hit pause on reopening. This could ultimately slow the pace of hiring and economic recovery.
The weekly average rates for new mortgages as of 2nd July were quoted by Freddie Mac to be:
According to Freddie Mac:
For the week ending 26th June, 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, declined by 1.8% in the week ending 26th June. In the week prior, the Index had fallen by 8.7%.
The Refinance Index decreased by 2% and was up by 74% from the same week a year ago. The Index had slid by 12% in the previous week.
The refinance share of mortgage activity fell from 61.3% to 61.2% of total applications in the week ending 26th June. In the week prior, the share had decreased from 63.2% to 61.3% of total applications.
According to the MBA:
It’s another relatively quiet 1st half of the week for the Greenback.
Key stats from the U.S include the market’s preferred ISM Non-Manufacturing PMI for June and the weekly jobless claims.
Expect both sets of figures to garner plenty of attention, with May’s JOLTs job openings also likely to draw attention.
Outside of the numbers, however, COVID-19 and geopolitics will continue to influence market risk sentiment.
The markets will be looking for further progress towards a COVID-19 vaccine and for Trump to hold back on tariffs… There’s also the rising tension between the U.S and China to consider.
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.