US mortgage rates hold ahead of Jackson Hole Symposium

Mortgage rates fell after rising only on the 2sd times in 7 weeks in the previous week.

In the week ending 19the In August, fixed 30-year rates fell 1 basis point to 2.86%. Mortgage rates had jumped 10 basis points the previous week.

30-year mortgage rates have only risen past the 3% mark once since 21st April.

Compared to the same period last year, fixed 30-year rates fell 13 basis points.

Fixed 30-year rates are still down 208 basis points since the last peak in November 2018 at 4.94%.

Economic data of the week

The first half of the week was relatively busy on the economic data front. Key US statistics included manufacturing figures for New York State, industrial production, and retail sales figures.

The statistics were negative, with retail sales falling 1.0% in July from an expected decline of 0.3%. Retail sales increased 0.7% in June.

In August, the NY Empire State Manufacturing index slipped from 43.0 to 18.3% against an expected decline to 29.0.

On the monetary policy front, the minutes of the FOMC meeting revealed increased debate on reducing the asset purchase program. After impressive salaries for NFPs, chatter from FOMC members during the week weighed on riskier assets, with members citing the need to act.

Moreover, economic data from China added to concerns about the economic recovery earlier this week.

Capital investment increased 6.4% in July year on year, compared to 8.3% in June. Retail sales rose 8.5% from 12.6% in June.

Freddie Mac Pricing

Average weekly rates for new mortgages as of the 19e August were cited by Freddie mac to be:

According to Freddie Mac,

  • Mortgage rates remained relatively stable during the week. Housing is in a phase of the economic cycle similar to that of many other consumer goods.

  • While there is strong latent demand, the low supply has caused prices to increase as shortages restrict the volume of sales activity that would otherwise occur.

Mortgage Bankers Association rate

For the week ending 13e August, the rates were:

  • The 30-year average interest rates set with compliant loan balances fell from 2.99% to 3.06. Points increased from 0.30 to 0.34 (including origination fees) for LTV loans at 80%.

  • The 30-year average fixed mortgage rates guaranteed by the FHA fell from 3.06% to 3.15%. Points increased from 0.27 to 0.31 (including origination fees) for LTV loans at 80%.

  • The 30-year average rates for jumbo loan balances fell from 3.15% to 3.19%. Points increased from 0.29 to 0.26 (including origination fees) for LTV loans at 80%.

Weekly figures released by the Mortgage Bankers Association showed that the Composite Market Index, which is a measure of mortgage application volume, fell 3.9% in the week ending the 13th.e August. Over the previous week, the index had risen 2.8%.

The refinancing index fell 5% and was 8% lower than a week earlier. The index had risen 3% the week before.

In the week ending 13e In August, the refinancing share of mortgage activity fell from 68.0% to 67.3%. The share had fallen from 67.6% to 68.0% the previous week.

According to the MBA,

  • Mortgage rates hit their highest level in about a month, with the 30-year fixed rate surpassing 3.0%.

  • Rates followed an overall increase in Treasury yields last week, which started high from the strong July jobs report before slowing in response to weaker consumer sentiment and concerns about COVID-19.

  • Purchase requisitions have seen mixed results and, despite a second consecutive weekly decline, average loan sizes remain close to record levels.

  • This is a persistent sign that selling prices are still high, driven by fierce competition leading to acceleration in house price growth.

For the coming week

The preliminary private sector PMIs for August on Monday and core durable goods orders on Tuesday will be the focus of attention.

Expect the services PMI and core durable goods orders to be key to the economic calendar.

On the monetary policy front, the chatter of FOMC members ahead of the Fed’s Jackson Hole Symposium will also have a big impact on yields.

This item was originally posted on FX Empire

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