November 4, 2021
  • November 4, 2021

Mortgage rates rise in the United States for a third consecutive week

By on October 31, 2021 0

Mortgage rates are on the rise again, staying at 3% for the 5the time since 21st April.

In the week ending 28e October, 30-year fixed rates rose 5 basis points to 3.14%.

Compared to the same period last year, 30-year fixed rates rose 33 basis points.

Fixed 30-year rates are still down 180 basis points since the last peak in November 2018 at 4.94%.

Economic data of the week

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

Consumer confidence and basic durable goods orders were key statistics at the start of the week.

The numbers were biased towards the positive, with consumer confidence showing a marked improvement.

In October, the CB consumer confidence index fell from 109.8 to 113.8.

Basic durable goods rose 0.4% after rising 0.3% in August, which was also positive for the market.

With inflationary pressures lingering, the numbers supported US Treasury yields, as markets anxiously awaited the Fed’s policy decision this coming week.

Freddie Mac Pricing

Average weekly rates for new mortgages at 28e October were cited by Freddie mac to be:

According to Freddie Mac,

  • The yield on the 10-year treasury bill has trended higher due to the decline in new cases of COVID-19.

  • Improving consumer confidence, worsening inflation and persistent shortages have also contributed.

  • As mortgage rates rise, buying demand remains firm, showing that there is latent buying demand among consumers.

Mortgage Bankers Association rate

For the week ending 22sd October, the rates were:

  • The 30-year average interest rates set with compliant loan balances fell from 3.23% to 3.30%. Points increased from 0.35 to 0.34 (including origination fees) for LTV loans at 80%.

  • The 30-year average fixed mortgage rates backed by the FHA fell from 3.17% to 3.31%. Points increased from 0.32 to 0.38 (including origination fees) for LTV loans at 80%.

  • The 30-year average rates for jumbo loan balances fell from 3.26% to 3.34%. Points increased from 0.33 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 0.3% in the week ending the October. The previous week, the index had fallen 6.3%.

The refinancing index fell 2% and was 26% lower than the same week a year ago. The previous week, the index had fallen 7%.

The refinancing share of mortgage activity fell from 63.3% to 62.2% in the week ending 22sd October. The previous week, the share had risen from 63.9% to 63.3% of total claims.

According to the MBA,

  • Mortgage rates rose again last week, as the 30-year fixed rate and 15-year fixed rate hit their highest levels in 8 months.

  • Under the effect of the uptrend, refinancing activity fell by 5e week in a row at its slowest weekly pace since Jan-2020.

  • Higher rates continue to reduce the incentive for borrowers to refinance.

  • Purchase requests increased slightly and the average loan amount reached its highest level in 3 weeks.

  • Growth in higher price segments continues to dominate purchasing activity.

  • Last month, new and existing home sales were at their highest pace since the start of the year.

  • However, first-time buyers represent a declining share of the activity.

  • Home prices are still rising at a rapid rate, although monthly growth rates are showing signs of moderation.

For the coming week

It’s a busier first half of the week on the US economic calendar.

At the start of the week, the ISM manufacturing PMI figures will set the tone. While the headline figure will be critical, the sub-components of inflation, employment and new orders will also have an influence.

On Wednesday, the focus will then be on non-farm employment development figures from ADP and the ISM non-manufacturing PMI.

The two sets of numbers will also provide direction.

The main event of the week, however, will be the Fed’s monetary policy decision on Wednesday. Tapering and the Fed’s outlook on inflation and interest rates will be essential …

This article originally appeared on FX Empire

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