The upward trend in U.S mortgage rates resumed albeit modestly. Expectations are for rates to continue to head northwards.
Mortgage rates were on the rise after 3 weeks of hovering. The rise came off the back of positive stats and a shift in FED monetary policy guidance.
In the week ending 16th December, 30-year fixed rates rose by 2 basis point to 3.12%.
Compared to this time last year, 30-year fixed rates were up by 45 basis points.
30-year fixed rates were still down by 182 basis points, however, since November 2018’s last peak of 4.94%.
It was a busy first half of the week on the U.S economic data front, with wholesale inflation and retail sales in focus.
A further pickup in wholesale inflationary pressures and softer than expected consumer spending tested support for riskier assets.
In November, the U.S core annual rate of wholesale inflation accelerated from 7.0% to 7.7%.
Core retail sales rose by just 0.3%, however, after having risen by 1.8% in October. Economists had forecast a 0.9% rise.
Ultimately, however, it was the FOMC monetary policy decision and economic projections that moved the markets.
In line with expectations, the FED announced a faster end to the asset purchasing program. To combat inflation, the FED also projected 3 rate hikes for next year. This was up from the September projections.
The weekly average rates for new mortgages as of 16th December were quoted by Freddie Mac to be:
According to Freddie Mac,
For the week ending 10th December, the rates were:
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, decreased by 4.0% in the week ending 10th December. The inde had increased by 2.0% in the week prior.
The Refinance Index fell by 6% from the previous week and was 41% lower than the same week one year ago. In the previous week, the index had increased by 9%. The refinance share of mortgage activity decreased from 63.9% to 63.3%. The share had increased from 59.4% to 63.9% in the previous week.
According to the MBA,
It’s a quieter first half of the week on the U.S economic calendar.
Economic data from the U.S is limited to finalized 3rd quarter GDP numbers on Wednesday. Barring marked revisions to the GDP numbers, we don’t expect the numbers to affect rates.
Away from the economic calendar, Omicron news updates will continue to be an area of interest, however.
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.