US mortgage rates pull back ahead of Fed policy decision next week

Mortgage rates fell for the 2sd time in 4 weeks in the week ending in 10e June.

Reversing a 4 basis point increase from the previous week, 30-year fixed rates fell 3 basis points to 2.96%.

The modest drop in mortgage rates left 30-year fixed rates below 3% for a 3rd consecutive week.

Compared to the same period last year, fixed 30-year rates have fallen by 25 basis points.

30-year fixed rates are still down 198 basis points since the last peak in November 2018 at 4.94%.

Economic data of the week

The first half of the week was particularly quiet on the US economic calendar.

Economic data through the 1st half of the week included job postings and business data for April.

The statistics were biased towards the positive, supporting the unwavering optimism towards the economic recovery.

Particularly disappointing nonfarm payroll figures from the previous week and uncertainty over inflation and labor market figures later in the week weighed on Treasury yields and, ultimately, on government bonds. mortgage rates.

Freddie Mac Pricing

Average weekly rates for new mortgages at 10e June were cited by Freddie mac to be:

  • Fixed 30-year rates fell 3 basis points to 2.96% on the week. Around the same time last year, rates were 3.21%. The average commission went from 0.6 to 0.7 points.
  • The 15-year fixed rate fell 4.23% base on the week. Rates fell 39 basis points from 2.62% a year ago. The average fee remained unchanged at 0.6 points.
  • 5-year fixed rates fell 9 basis points to 2.55%. Rates fell 55 points from 3.10% a year ago. The average fee remained unchanged at 0.2 points.

According to Freddie Mac,

  • The economy is recovering at a remarkably rapid pace. As restrictions related to the pandemic continue to lift, economic growth will remain strong in the coming months.
  • Despite the strength of the economy, the housing market is experiencing a slowdown in purchase requests due to slightly higher mortgage rates.
  • However, this has yet to translate into a lower trajectory for house prices as the shortage of inventory continues to keep prices high.

Mortgage Bankers Association rate

For the week ending 4e June, the rates have been:

  • The 30-year average interest rates set on compliant loan balances declined from 3.17% to 3.15%. Points increased from 0.39 to 0.34 (including origination fees) for LTV loans at 80%.
  • The 30-year average fixed mortgage rates guaranteed by the FHA fell from 3.16% to 3.12%. Points increased from 0.31 to 0.34 (including origination fees) for LTV loans at 80%.
  • The 30-year average rates for jumbo loan balances declined from 3.34% to 3.29%. Points increased from 0.38 to 0.32 (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 the volume of mortgage applications, fell a further 3.1% in the week ending 4e June. The previous week, the index had fallen 4.0%.

The refinancing index fell another 5% from the previous week and was 27% lower than the same week a year ago. The index was down 5% from the previous week.

In the week ending 4e In June, the refinancing share of mortgage activity fell from 61.3% to 60.4%. The share had fallen from 61.4% to 61.3% the previous week.

According to the MBA,

  • Most of the drop in mortgage rates occurred last week, with the 30-year fixed mortgage rate falling to 3.15%. This probably had an impact on refinancing requests.
  • With fewer homeowners able to take advantage of lower rates, the refinancing share fell to its lowest level since April.
  • The average loan amount on a requisition to purchase edged down to $ 407,000, below the record of $ 418,000 set in February.
  • House price growth continues to accelerate, driven by favorable demographics, a recovering labor market and economy, and demand for housing far outstripping supply.

For the coming week

Wholesale inflation and retail sales numbers will attract attention and influence mortgage rates.

The main event of the week, however, will be the FOMC’s decision and monetary policy projections.

Expect them to be the key to US Treasury yields and mortgage rates over the coming week.

Besides, economic data from China will also be a factor.

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