The upward trend in mortgage rates continued last week, with the 30-year fixed rate inching nearer to 6%. Purchase activity remains under pressure.
In the week ending June 23, mortgage rates rose for the third time in six weeks.
30-year fixed rates rose by three basis points to 5.81%. In the week prior, 30-year fixed rates surged by 55 basis points.
Year-on-year, 30-year fixed rates were up by 279 basis points and 87 basis points since November 2018’s last peak of 4.94%.
It was a quiet first half of the week, with no US stats to provide US Treasuries and mortgage rates with direction.
While there were no stats for the markets to consider, Fed Chair Powell gave testimony on Capitol Hill, which drew plenty of interest.
In line with market expectations, Fed Chair Powell discussed the need to continue hiking rates to bring inflation back to target.
According to FX Empire, Powell noted,
“We anticipate that ongoing rate increases will be appropriate; the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy.”
For riskier assets, Powell’s reference to the influence of incoming data and the economic outlook on the Fed interest rate path eased immediate concerns of a hard landing.
The relief was brief, however, with the Q&A session highlighting the Fed’s threat to the US economy.
Powell talked of the need to bring inflation to target at any cost, reigniting fears of a US recession driven by Fed monetary policy.
The weekly average rates for new mortgages, as of June 23, 2022, were quoted by Freddie Mac to be:
According to Freddie Mac,
For the week ending June 17, 2022, the rates were:
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, a measure of mortgage loan application volume, increased by 4.2%. The Index rose by 6.6% in the week prior.
The Refinance Index fell by 3% and was 77% lower than the same week one year ago. In the previous week, the Index increased by 4%.
The refinance share of mortgage activity decreased from 31.7% to 29.7%. In the previous week, the refinance share decreased from 32.2% to 31.7%.
According to the MBA,
It is a relatively busy first half of the week, with key stats from the US, including durable goods and core durable goods orders, consumer confidence, and Q2 GDP numbers.
Barring any revisions to the GDP numbers, the core durable goods orders and consumer confidence figures will likely have the greatest influence on mortgage rates.
Central bank chatter will also provide direction, however, with Fed Chair Powell due to speak on Wednesday.
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.