U.S Mortgage Rates Rise for the First Time in 4-WeeksMortgage rates rose for the first time in 4-weeks last week. More upside could be on the horizon should new COVID-19 cases continue slow.
Mortgage rates rose slightly in the week ending 13th February, ending a run of 3 consecutive weeks in the red.
In spite of the weekly rise, mortgage rates were at the lowest level since 26th October 2019, when 30-year rates had also stood at 3.47%. Historically, rates sat just 15 basis points above a historical low 3.32% back in November 2012, according to figures released by Freddie Mac.
Compared to this time last year, 30-year fixed rates were down by 90 basis points.
30-year fixed rates were also down by 147 basis points since November 2018’s most recent peak of 4.94%.
Economic Data from the Week
It was a relatively busy week on the economic data front. Key stats through the 1st half of the week included December JOLTs job openings and January inflation figures.
Outside of the numbers, FED Chair Powell delivered testimony to Congress, which also influenced U.S Treasuries.
Market sentiment towards COVID-19 updates from China was the key driver through the week, however.
After a testy start to the week, risk appetite returned on Tuesday, sinking Treasury yields as numbers from China suggested that the spread of the virus was easing.
U.S equities hit record highs in response, before a pullback through the 2nd half of the week.
Freddie Mac Rates
The weekly average rates for new mortgages as of 13th February were quoted by Freddie Mac to be:
- 30-year fixed rates increased by 2 basis points to 3.47% in the week. Rates were down from 4.37% from a year ago. The average fee remained unchanged at 0.7 points.
- 15-year fixed rates remained unchanged at 2.97% in the week. Rates were down from 3.81% compared with a year ago. The average fee increased from 0.7 points to 0.8 points.
- 5-year fixed rates decreased by 4 basis points to 3.28% in the week. Rates were down by 60 points from last year’s 3.88%. The average fee rose from 0.2 to 0.3 points.
According to Freddie Mac, mortgage rates sat at close to a 5-decade low. Refinance activity was on the rise, surging to the highest level in 7-years.
The upswing in refinancing and strong purchase activity meant that total mortgage demand remains robust, reflecting a solid economic backdrop.
Mortgage Bankers’ Association Rates
For the week ending 7th February, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, increased from 3.80% to 3.84. Points remained unchanged at 0.26 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances increased from 3.71% to 3.72%. Points remained unchanged at 0.28 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances increased from 3.70% to 3.75%. Points decreased from 0.19 to 0.17 (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 1.1% in the week ending 7th February. In the week ending 31st January, the index had increased by 5.0% to the highest level since May 2013.
The Refinance Index increased by 5% to hit the highest level since June 2013 and was up by 207% from the same week a year ago.
The index had jumped by 15% from the week prior to 31st January and had also hit the highest level since June 2013.
The refinance share of mortgage activity increased from 64.5% to 65.5% in the week ending 7th February. In the week prior, the refinance share had increased from 60.4% to 64.5%.
According to the MBA, the mortgage market remained active early in 2020, as applications increased for a 3rd consecutive week.
Mortgage rates remained close to their lowest levels since October 2016 in spite of the uptick last week.
A pickup in the jumbo lending market drove up loan sizes for refinances, as the refinance index hit its highest level since June 2013.
For the week ahead
It’s a relatively busy week ahead on the U.S economic calendar. Key stats include manufacturing numbers out of NY State and Philly. January’s housing sector and wholesale inflation figures are also in focus in a shortened week.
While the stats will influence, updates on COVID-19 and geopolitics will also influence demand for U.S Treasuries.