Mortgage rates fell to levels not seen since September, with concerns over the economic outlook hitting the equity markets and Treasury Yields.
Mortgage rates fell once more in the week ending 13th December, with 30-year fixed falling by 0.12 percentage points to a 3-month low 4.63%.
The fall in 30-year fixed to 4.63%, the lowest level since 12th September’s 4.60%, comes off the back of 5 consecutive weeks of either flat or falling mortgage rates and it couldn’t come at a better time for the housing sector. While wage growth may be a laggard to house price growth, tight labour market conditions, a softening in the housing sector and falling rates will give some much needed support through the low period.
A slide in U.S Treasuries drove mortgage rates south, driven by risk aversion, with economic data adding to the market angst over the economic outlook, yields falling in spite of an anticipated rate hike by the FED next week. Investors are expecting the FED to scale back its number of hikes for next year, economic indicators out of Asia, Europe and the U.S all raising red flags as the U.S – China trade war continues.
Freddie Mac weekly average rates for new mortgages as of 13th December were quoted to be:
Mortgage Bankers’ Association Rates for the week ending 7th December 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 1.6% in the week ending 7th December, following on from the previous week’s 2% rise, week-on-week.
The Refinance Index rose by 2%, in the week ending 7th December partially following on from the previous week’s 6% rise, with the share of refinance mortgages increasing from 40.4% to 41.5%, the highest share of applications since March 2018.
The MBA noted that rates fell across the board alongside U.S Treasury yields, with trade fears continuing to plague the global financial markets, exasperated by the latest widening in the U.S trade deficit.
Alongside falling rates, applications were on the rise, with purchase activity also on the up by more than 3% year-on-year.
The Mortgage Bankers’ Association released its quarterly mortgage debt figures for the 3rd quarter:
The Mortgage Bankers’ Association also released November’s new home purchase mortgage applications:
For the week ahead, focus will be on the FED and of greatest significance, the FOMC’s economic projections and FED Chair Powell press conference late on Wednesday. Prospective home buyers could get more relief on mortgage rates should the FED acknowledge that economic headwinds are beginning to form, with the FOMC doves likely to skew the projections in their favour for 2019.
On the data front, November housing sector data due out through the first half of the week will be of interest, with building permits, housing starts and existing home sales figures due out. It could be quite a turnaround for those who held back from jumping onto the property ladder earlier in the year as mortgage rates began to rise…
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.