U.S mortgage rates hold steady in spite of the risk aversion in the week. The U.S Presidential Election should move the dial in the week ahead.
Mortgage rates avoided a fall to yet another all-time low in the week ending 29th October. Following a 1 basis point fall in the week prior, the 30-year fixed rate rose by 1 basis point to 2.81%.
Compared to this time last year, 30-year fixed rates were down by 97 basis points.
30-year fixed rates were also down by 213 basis points since November 2018’s most recent peak of 4.94%.
Economic data was on the lighter side in the 1st half of the week.
Key stats included durable goods and core durable goods orders for September and October consumer confidence figures.
It was a mixed bag on the data front.
While both durable goods and core durable goods orders rose in September, consumer confidence softened in October.
The stats had a muted impact on the broader market, however, with a surge in new COVID-19 cases weighing on risk appetite.
With a number of EU member states reintroducing lockdown measures, the fear is that the U.S may have to follow.
On the geopolitical risk front, market jitters ahead of the U.S Presidential Election next week also weighed on riskier assets.
The weekly average rates for new mortgages as of 29th October were quoted by Freddie Mac to be:
According to Freddie Mac,
For the week ending 23rd October, 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, increased by 1.7% in the week ending 23rd October. In the week prior, the index had slipped by 0.6%.
The Refinance Index increased by 3% and was 80% higher than the same week a year ago. In the week prior, the index had risen by 0.2%.
The refinance share of mortgage activity increased from 66.1% to 66.7%. In the previous week, the share had risen from 65.6% to 66.1%.
According to the MBA,
It’s a busier 1st half of the week on the U.S economic calendar.
Key stats include the market’s preferred ISM Manufacturing and Non-Manufacturing PMIs and ADP nonfarm employment change figures.
Factory orders are also in focus but will likely be overshadowed by the private sector PMIs and labor market numbers.
The main event, in the 1st half of the week, is the U.S Presidential Election, however.
Expect plenty of market volatility that will influence U.S Treasury yields and ultimately mortgage rates.
With the election the key driver, COVID-19 updates will also provide direction. Any suggestions of a reintroduction of lockdown measures across badly affected U.S states would further test risk appetite.
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.