Mortgage rates fall again as the U.S - China trade war begins to take its toll on the U.S and global economies.
Mortgage rates fell for a 4th consecutive week in the week ending 23rd May. 30-year fixed rates fell by 1 basis point following on from a 3 basis point fall from the previous week. The 1 basis point fall took 30-year rates to 4.06% according to figures released by Freddie Mac.
Following the weekly fall, 30-year fixed rates stood 60 basis points below levels from 12-months ago.
More significantly, 30-year fixed rates have fallen by 88 basis points since last November’s most recent peak of 4.94%.
Economic data through the first half of the week was on the lighter side. April existing home sales figures weighed on the Greenback on Tuesday.
Outside of the stats, the FOMC meeting minutes also provided direction on Wednesday. The minutes continued to reflect the FED’s intentions to hold on policy near term.
The lack of economic data left market sentiment towards the extended U.S – China trade war to pin back U.S Treasury yields on the week.
The weekly average rates for new mortgages as of 23rd May were quoted by Freddie Mac to be:
According to Freddie Mac, the downward trend in mortgage rates supported purchase demand. More affluent consumers were reported to be more responsive to the downward trend in rates.
For the week ending 17th May, 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 2.4% in the week ending 17th May. The increase reversed a 0.6% fall in the week ending 10th May.
The Refinance Index increased by 8% in the week ending 17th May. The Index had decreased by 1% in the previous week ending 10th May.
The share of refinance remained increased from 37.9% to 40.5% following a hold at 37.9% in the week prior.
According to the MBA, while lower interest rates supported borrowers with larger balances, purchase activity declined again. In spite of purchase activity up by 7% over the year, the MBA will be looking to see whether the extended U.S – China trade war will impact demand. Uncertainty may begin to weigh on applications and purchases near-term.
It’s another quiet 1st half of the week ahead. May consumer confidence and March house price figures are due out in the 1st half of the week.
We expect the consumer confidence numbers to have a material influence early on in the week. Disappointing real estate figures suggest some caution creeping in, despite strong labor market conditions.
Outside of the stats, market risk sentiment will be key in the week. U.S – China trade war chatter and market reaction to the EU Parliamentary elections will be of significant influence early on in the week.
Weaker than anticipated economic data out of the Eurozone and the U.S late last week will test investor resolve should there be no progress on trade talks.
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.