U.S. mortgage rates rise but fall below 3%

Mortgage rates rebounded, with rates rising for the 2sd time in 7 weeks.

In the week ending 12e In August, fixed 30-year rates jumped 10 basis points to 2.87%. Mortgage rates had fallen by 3 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 by 9 basis points.

Fixed 30-year rates are still down 207 basis points since the last peak in November 2018 at 4.94%.

Economic data of the week

It was a relatively busy first half of a week on the US economic calendar.

Job offers at JOLT, 2sd the unit’s labor costs and non-farm productivity for the quarter, as well as the July inflation figures were the focus of attention.

A sharp recovery in job vacancies was positive for returns at the start of the week.

The rest of the statistics, however, were biased towards the negative.

Inflationary pressures eased in July, with the annual core inflation rate falling from 4.5% to 4.3%.

Unit labor costs rose a modest 1.0% in the 2sd quarter, non-farm productivity increased by 2.3%. In the 1st quarter, unit labor costs increased by 2.8% and NFP productivity by 4.3%.

While the statistics were negative, the NFP’s impressive figures from the previous Friday for July pushed mortgage rates north.

Freddie Mac Pricing

Average weekly rates for new mortgages at 12e August were cited by Freddie mac to be:

According to Freddie Mac,

  • The previous Friday’s payroll and non-farm wage growth figures pushed mortgage rates northward during the week.

  • Despite the increase, rates remain very low, especially since economic growth is strong and will continue next year.

Mortgage Bankers Association rate

For the week ending 6the August, the rates were:

  • The 30-year average interest rates set with compliant loan balances fell from 2.97% to 2.99%. Points increased from 0.33 to 0.30 (including origination fees) for LTV loans at 80%.

  • The 30-year average fixed mortgage rates guaranteed by the FHA fell from 3.08% to 3.06%. Points increased from 0.29 to 0.27 (including origination fees) for LTV loans at 80%.

  • The 30-year average rates for jumbo loan balances fell from 3.12% to 3.15%. Points increased from 0.30 to 0.29 (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, rose 2.8% in the week ending 6e August. The previous week, the index had fallen 1.7%.

The refinancing index rose 3% and was 8% lower than the same week a year ago. The index had fallen 2% the week before.

In the week ending 6the In August, the refinancing share of mortgage activity fell from 67.6% to 68.0%. The share had fallen from 67.5% to 67.6 the previous week.

According to the MBA,

  • Mortgage applications rebounded, including an increase in purchase requests, for the first time in nearly a month.

  • While they were up, driven by a weekend hike in 10-year Treasury yields, rates remained below 3%. A positive employment report for July sent returns north.

  • Homeowners continue to respond to lower rates, with refinancing activity reaching its highest level since February 2021.

For the coming week

The NY Empire State Manufacturing figures for August and the retail sales figures for July will be the focus of attention.

Expect retail sales figures to be critical as markets look for other factors that could force the Fed to act.

Midweek housing sector data for July will also attract interest, but likely won’t impact Treasury yields. Housing starts and building permits are expiring.

On the monetary policy front, the minutes of the FOMC meeting will influence the week. Expect any hawkish gossip to drive mortgage rates up.

This article originally appeared on FX Empire

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