U.S Mortgages – Rates Up for a 3rd Week, Weighing on Applications…

Mortgage rates were on the rise again and applications continued to hit reverse. The FED will likely decide what’s next in the week ahead…
Bob Mason
Upscale modern house for sale

Mortgage rates continued to rise in the week ending 25th April. 30-year fixed rates rose by 3 basis points following on from a 5 basis point rise from the previous week. The 3 basis point rise took 30-year rates to 4.20% according to figures released by Freddie Mac.

Following the weekly uptick, 30-year fixed rates stood 38 basis points below levels from 12-months ago.

More significantly, 30-year fixed rates remain 74 basis points below last November’s high of 4.94%.

Economic Data from the Week

Economic data released out of the U.S through the first half of the week was on the lighter side. Key stats were limited to March existing home sales and new home sales figures.

While existing home sales slumped by 4.9%, new home sales jumped by 4.5%, painting a mixed picture of the real estate market. On the one hand, mortgage rates are well below last November’s high. On the other hand, the recent uptrend may well have priced out some of those looking to enter the market.

While the stats provided little direction, general sentiment towards the U.S economy supported an uptick in Treasury yields. All of this was before Friday’s 1st estimate GDP numbers.

Corporate earnings added to the allure of riskier assets, with the S&P500 and NASDAQ closing out the week in positive territory.

There were no major geopolitical events to rock the boat, which was certainly a negative for those looking to refinance.

Freddie Mac Rates

The weekly average rates for new mortgages as of 25th April were quoted by Freddie Mac to be:

  • 30-year fixed rates rose 3 basis points to 4.20% in the week. Rates were down from 4.58% from a year ago. The average fee held steady at 0.5 points.
  • 15-year fixed rates rose by 2 basis points to 3.64% in the week. Rates were down from 4.02% from a year ago. The average fee held steady at 0.5 points.
  • 5-year fixed rates decreased by 1 basis points to 3.77% in the week. Rates increased by 3 basis points from last year’s 3.74%. The average fee increased from 0.3 points to 0.4 points.

According to Freddie Mac, in spite of a 4th consecutive weekly rise in mortgage rates, new home sales continue to rise. Improved affordability and a lagged effect of lower rates on demand are expected to support the sector in the months ahead.

Mortgage Bankers’ Association Rates

For the week ending 19th April, rates were quoted to be:

  • Average interest rates for 30-year fixed, backed by the FHA, increased from 4.43% to 4.49%. Points increased from 0.56 to 0.57 (incl. origination fee) for 80% LTV loans.
  • Average interest rates for 30-year fixed with conforming loan balances increased from 4.44% to 4.46%. Points increased from 0.42 to 0.44 (incl. origination fee) for 80% LTV loans.
  • Average 30-year rates for jumbo loan balances increased from 4.33% to 4.35%. Points increased from 0.23 to 0.25 (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, declined by 7.3% in the week ending 19th April. The pullback came off the back of a 3.5% fall in the week ending 12th April.

The Refinance Index fell by 11% in the week ending 19th April. The slide came off the back of an 8% fall in the week ending 12th April.

The share of refinance mortgages fell from 41.5% to 39.4%, following a decrease from 44.1% to 41.5% in the week prior.

According to the MBA, mortgage rates are up by 10 basis points over the last few weeks to hit the highest level in a month. Refinance applications continue to be the most sensitive to mortgage rates. Purchase activity also slipped, whilst sitting up by almost 3% on last year.

While labor market conditions remain supportive of the sector, rising rates could begin to price out prospective buyers on the lower end of the property ladder.

For the week ahead

It’s a big week ahead. Following some disappointing numbers embedded within the 1st quarter GDP figure, the focus will shift to Monday’s stats.

The FED’s preferred Core PCE Price Index figures are due out on Monday along with personal spending. Following the slide in consumption figures in the 1st quarter, according to the latest GDP report, personal spending will influence.

Ultimately, it’s going to boil down to inflation. Market consensus continues to point to a FED rate cut later in the year. Any uptick in inflationary pressures and expect a marked response.

On Tuesday, the focus will be on the April consumer confidence index that is released ahead of ADP nonfarm employment change and ISM manufacturing PMI numbers on Wednesday.

Wrapping things up for the first half of the week will be the FOMC monetary policy decision. Will the FED be hawkish or dovish?

Mortgage rates will be reactive in the week ahead…

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.