U.S Mortgage Rates Hit Reverse with More on the Way
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Mortgage rates hit reverse in the week ending 27th February, the pullback marking a 4th week in decline out of 6.
The weekly decline saw mortgage rates reverse two consecutive weekly gains to leave rates back at the lowest level since Oct-16.
Market risk aversion stemming from the spread of the coronavirus did the damage in the week, as the U.S also fell victim to the virus.
Compared to this time last year, 30-year fixed rates were down by 90 basis points.
30-year fixed rates were also down by 149 basis points since November 2018’s most recent peak of 4.94%.
Economic Data from the Week
Economic data through the 1st half of the week was on the lighter side. Key stats included February consumer confidence and January core durable goods orders.
While there was a slight uptick in the numbers, private sector PMI numbers from the previous Friday had reported a contraction in the services sector. It was the PMIs that shifted sentiment towards the Dollar from a data perspective.
On the housing sector front, economic data continued to paint a rosy picture, however.
New home sales jumped by 7.9% in January, with pending home sales rising by 5.2%.
We saw U.S Treasury yields hit reverse, with new coronavirus cases and a stark warning by the CDC driving U.S equity markets into corrective territory.
FED Chair Powell had talked of a resilient U.S economy. Recent economic data and the risk of a spread of the virus across the U.S suggested otherwise.
On Friday of last week, the FED Chair stated that the FED was monitoring events closely and would use the tools necessary to provide support.
Freddie Mac Rates
The weekly average rates for new mortgages as of 27th February were quoted by Freddie Mac to be:
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30-year fixed rates decreased by 4 basis points to 3.45% in the week. Rates were down from 4.35% from a year ago. The average fee remained unchanged at 0.7 points.
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15-year fixed also fell by 4 basis points 2.95% in the week. Rates were down from 3.77% compared with a year ago. The average fee remained unchanged at 0.8 points.
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5-year fixed rates decreased by 5 basis points to 3.20% in the week. Rates were down by 64 points from last year’s 3.84%. The average fee remained unchanged at 0.2 points.
According to Freddie Mac, the downward move in mortgage rates was not surprising given the volatility in 10-year Treasury yields.
The low mortgage rate environment coupled with high consumer confidence is expected to drive home sales upward. This trend is anticipated to continue into the Spring.
Mortgage Bankers’ Association Rates
For the week ending 21st February, rates were quoted to be: