Abstract：U.S 30-year fixed rates fell back to sub-3% levels as uncertainty over the COVID-19 stimulus bill and COVID-19 tested the markets.
Mortgage rates returned to sub-3% levels to sit just above an all-time low 2.98% from back in the week ending 16th July.
The 6th weekly decline in 7-weeks saw 30-year fixed rates fall by 2 basis points to 2.99% in the week ending 30th July. In the previous week, 30-year fixed rates had risen by 3 basis points to 3.01%.
Compared to this time last year, 30-year fixed rates were down by 76 basis points.
30-year fixed rates were also down by 195 basis points since November 2018s most recent peak of 4.94%.
Economic Data from the Week
Economic data was on the busier side through the 1st half of the week.
Key stats included June durable and core durable goods orders and July consumer confidence figures.
While durable and core durable goods were on the rise, consumer confidence weakened in July. The decline was as a result of the 2nd wave of the COVID-19 pandemic.
Economic uncertainty has built up as a result of a reintroduction of containment measures that contributed to the previous weeks rise in jobless claims.
Away from the economic calendar, the FED was in action, delivering an anticipated dovish tone.
[fx-article-ad]Freddie Mac Rates
The weekly average rates for new mortgages as of 30th July were quoted byFreddie Macto be:
30-year fixed rates slipped by 2 basis points to 3.01% in the week. Rates were down from 3.75% from a year ago. The average fee remained unchanged at 0.8 points.
15-year fixed rates fell by 3 basis points to 2.51% in the week. Rates were down from 3.20% compared with a year ago. The average fee remained unchanged at 0.7 points.
5-year fixed rates slid by 15 basis points to 2.94% in the week. Rates were down by 52 points from last years 3.46%. The average fee increased from 0.3 points to 0.4 points.
According to Freddie Mac,
Mortgage rates continue to remain near historic lows, driving purchase demand over 20% above a year ago.
The real estate sector is one of the bright spots in the economy, with strong demand and a modest slowdown in house prices heading into the late summer.
House sales should remain strong for the next few months going into the early fall.
Mortgage Bankers Association Rates
For the week ending 24th July, rateswere quoted to be:
Average interest rates for 30-year fixed, backed by the FHA, increased from 3.13% to 3.27%. Points increased from 0.29 to 0.35 (incl. origination fee) for 80% LTV loans.
Average interest rates for 30-year fixed with conforming loan balances remained unchanged at 3.20%. Points rose from 0.35 to 0.37 (incl. origination fee) for 80% LTV loans.
Average 30-year rates for jumbo loan balances increased from 3.51% to 3.52. Points increased from 0.29 to 0.30 (incl. origination fee) for 80% LTV loans.
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, decreased by 0.8% in the week ending 24th July. In the week prior, the index had increased by 4.1%.
The Refinance Index slipped by 0.4% and was 121% higher than the same week a year ago. In the week prior, the index had risen by 5%.
The refinance share of mortgage activity increased from 64.8% to 65.1% in the week ending 24th July. In the week prior, the share had increased from 64.2 to 64.8%.
According to the MBA,
Mortgage rates remained near record lows for conventional loans and refinance in the conventional sector continued to see moderate increases.
Rates on FHA loans rose, however, leading to an almost 18% fall in FHA refinances.
Homebuyers stepped back slightly, and there was a larger drop in purchase application volume for FHA, VA, and USDA loans.
This trend, along with a rising average loan size, indicates that prospective first-time buyers are being impacted more by rising economic stress.
Uncertainty over how the next round of government support will take shape was also viewed to be a factor in demand.
For the week ahead
Its a relatively busy 1st half of the week on the U.S economic calendar.
Key stats in the 1st half of the week include Julys ISM private sector PMIs and ADP nonfarm employment change figures. June factory orders and trade data are also due out.
From elsewhere, private sector PMIs from China will also garner attention early in the week.
Away from the economic calendar, COVID-19, the COVID-19 stimulus package, and Trump will also impact yields and mortgage rates.