Mortgage rates have remained relatively stable after peaking in early February.
In the week ending on the 24thand In February, 30-year fixed rates slipped three basis points to 3.89%. 30-year fixed rates had jumped 23 basis points the previous week. 30-year fixed rates held above 3% for 15 yearsand consecutive week.
Compared to the same period last year, 30-year fixed rates increased by 92 basis points.
However, 30-year fixed rates were still down 105 basis points from the last peak in November 2018 at 4.94%.
Economic data of the week
US economic data was rather weak in the first part of the week. The private sector PMI and consumer confidence figures for February were in focus. The numbers were positive, with a strong recovery in service sector activity positive for US Treasury yields.
In February, the services PMI jumped from 51.2 to 56.7, pushing the composite PMI from 51.1 to 56.0. While private sector PMIs were positive, consumer confidence weakened. In February, the CB consumer confidence index fell from 111.1 to 110.5.
While the statistics were upbeat, geopolitics weighed on demand for riskier assets during the week.
Freddie Mac Pricing
Average weekly rates for new mortgages as of 24and February were cited by Freddie Mac to be:
- 30-year fixed rates slipped 3 basis points to 3.89% in the week. At this time last year, rates stood at 2.87%. The average fee remained unchanged at 0.8 points.
- 15-year fixed rates fell 1 basis point to 3.14% in the week. Rates rose 80 basis points from 2.34% a year ago. The average price fell from 0.8 point to 0.7 point.
- 5-year fixed rates remained stable at 2.98%. Rates fell 1 basis point from 2.99% a year ago. The average commission remained unchanged at 0.3 points.
According to Freddie Mac,
- Despite lower mortgage rates, rates have risen more than one percent in six months.
- Economic growth remains strong while rising inflation is impacting consumer confidence, which took a hit at the turn of the year.
- Rising mortgage rates and low inventories will likely support a renewed upward trend in house prices before falling again later in the year.
Mortgage Bankers Association Rates
For the week ending 18and February, the rates were:
- Average 30-year interest rates fixed with compliant loan balances fell from 4.05% to 4.06%. Points increased from 0.45 to 0.48 (origination fee included) for 80% LTV loans.
- Average FHA-backed 30-year fixed mortgage rates fell from 4.01% to 4.09%. Points increased from 0.59 to 0.56 (origination fee included) for 80% LTV loans.
- The 30-year average rates for jumbo loan balances fell from 3.81% to 3.84%. Points increased from 0.39 to 0.45 (origination fee included) for 80% LTV loans.
Weekly figures released by the Mortgage Bankers Association showed the composite market index, which measures the volume of mortgage applications, fell 13.1% in the week ending 18and February. The index had fallen 5.4% the previous week.
The refinancing index slipped 16% and was 56% lower than the same week a year ago. The previous week, the index had fallen by 9%.
The refinancing share of mortgage activity decreased from 52.8 to 50.1%. The previous week, the share had fallen from 56.2% to 52.8%.
According to the MBA,
- Mortgage applications fell to their lowest level since December 2019, weighed down by the upward trend in mortgage rates.
- Rising mortgage rates have hit refinances, with refinance activity declining in six of the first seven weeks of the year.
- Although the average loan size did not increase during the week, it hovered around the record high of $453,000 from last week’s survey.
For the coming week
In the United States, the figures for the evolution of non-agricultural employment from the manufacturing ISM and the ADP will be decisive at the start of the week. While statistics will attract attention, geopolitics will be the main driver. Last Thursday, Russia invaded Ukraine, boosting demand for refuges. Progress towards the end of the invasion would support a further recovery in mortgage rates.