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 from the Week
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.
Freddie Mac Rates
The weekly average rates for new mortgages as of 23rd May were quoted by Freddie Mac to be:
- 30-year fixed rates fell by 1 basis points to 4.06% in the week. Rates were down from 4.66% from a year ago. The average fee held steady at 0.5 points.
- 15-year fixed rates slipped by 2 basis points to 3.51% in the week. Rates were down from 4.15% from a year ago. The average fee remained unchanged at 0.4 points.
- 5-year fixed rates increased by 2 basis points to 3.68% in the week. Rates decreased by 19 basis points from last year’s 3.87%. The average fee held steady at 0.4 points.
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.
Mortgage Bankers’ Association Rates
For the week ending 17th May, rates were quoted to be:
- Average interest rates for 30-year fixed, backed by the FHA, increased from 4.32% to 4.34%. Points decreased from 0.49 to 0.47 (incl. origination fee) for 80% LTV loans.
- Average interest rates for 30-year fixed with conforming loan balances decreased from 4.40% to 4.33%. Points increased from 0.40 to 0.43 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances remained unchanged at 4.24%. Points increased from 0.27 to 0.35 (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 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.
For the week ahead
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.