US mortgage rates continue to sit below 3% amid disappointing NFP figures

Mortgage rates were on the rise again, registering a 3^rd weekly increase in 4 weeks.

Reversing a 5 basis point decline from the previous week, 30-year fixed rates rose 4 basis points to 2.99%.

The modest increase in mortgage rates has left 30-year fixed rates below 3% for a 2^sd consecutive week.

Compared to the same period last year, fixed 30-year rates fell 19 basis points.

30-year fixed rates are still down 195 basis points since the last peak in November 2018 at 4.94%.

Economic data of the week

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

Key statistics included the manufacturing PMI figures for May. The statistics were biased towards the positive, supporting market optimism towards the economic outlook.

In May, the market’s preferred ISM manufacturing PMI fell from 60.7 to 61.2.

There were also discussions from the FOMC during the week regarding a willingness to start discussing a reduction in the asset purchase program.

Coupled with the President’s spending plans, rates rose during the week.

Freddie Mac Pricing

Average weekly rates for new mortgages at 3^rd June were cited by Freddie mac to be:

According to Freddie Mac,

• Home prices continued to accelerate while inventories remained low.

• New home construction cannot catch up fast enough, putting upward pressure on house prices.

• Many potential buyers would like to take advantage of low mortgage rates.

• The competition is strong, however.

• For homeowners, keeping rates low makes refinancing an option to consider.

Mortgage Bankers Association rate

The story continues

For the week ending 28^e That the rates have been:

• Average interest rates for 30-year fixed conforming loan balances increased from 3.18% to 3.17%. Points increased from 0.35 to 0.39 (including origination fees) for LTV loans at 80%.

• Average 30-year fixed mortgage rates guaranteed by the FHA fell from 3.20% to 3.16%. Points increased from 0.25 to 0.31 (including origination fees) for LTV loans at 80%.

• The 30-year average rates for jumbo loan balances fell from 3.30% to 3.34%. Points increased from 0.30 to 0.38 (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 4.0% in the week ending the 28th.^e May. The previous week, the index had fallen 4.2%.

The refinancing index fell 5% from the previous week and was 6% higher than the same week a year ago. The index had fallen 7% the week before.

In the week ending 28^e In May, the refinancing share of mortgage activity rose from 61.4% to 61.3% of total applications. The share had fallen from 63.3% to 61.4% the previous week.

According to the MBA,

• Mortgage applications fell by a 2^sd week in a row, with the overall index hitting its lowest level since February 2020.

• Tight home inventories, obstacles to a faster pace of new construction and rapidly rising home prices continued to dampen buying activity.

• The government purchasing index has fallen to its lowest level in over a year and has now fallen year over year for 5 consecutive weeks.

• Purchase requests are down almost 2% from a year ago.

• Refinancing activity also fell for a 2^sd consecutive week.

• Even though rates fell below 3.2% in the past month, they are still around 20 to 30 basis points higher than record lows at the end of 2020.

For the coming week

It’s a particularly quiet first half of the week on the US economic calendar. JOLT’s job postings and trade figures are expected to be released earlier this week.

After some disappointing NFP numbers on Friday, expect more interest in April job postings.

Moreover, trade data from China will also influence market risk sentiment at the start of the week.

The May non-farm payroll figures in the United States, however, will likely support a decline in mortgage rates during the week.

On the monetary policy front, however, FOMC chatter will also influence. Friday’s NFP figures raised doubts as to whether the FED will make a move in the near term …

This item was originally posted on FX Empire

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