U.S Mortgage Rates See Red for a 3rd Consecutive Week
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Mortgage rates fell for a 3rd consecutive week in the week ending 6th February.
30-year fixed mortgage rates fell by 6 basis points to 3.45%. In the week ending 30th January, 30-year rates had fallen by 9 basis points to 3.51%.
The weekly decline left mortgage rates at the lowest level since 4th September 2019, when 30-year rates had stood at 3.49%. Historically, rates sit just 13 basis points above a low 3.32% back in November 2012, according to figures released by Freddie Mac.
Compared to this time last year, 30-year fixed rates were down by 96 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
It was a busy week on the economic data front. Through the 1st half of the week, key stats included January private sector PMI figures on Monday and Wednesday.
Factory orders and ADP nonfarm employment change figures were also in focus on Tuesday and Wednesday.
The stats pointed towards a more positive economic outlook for the U.S, with a 291k jump in nonfarm a boon for the housing sector and consumer spending.
While the ISM Manufacturing PMI reported a return to expansion in January, service sector activity saw a quicker pace of growth. The ISM Non-Manufacturing PMI rose from 54.9 to 55.5.
A 1.8% rise in factory orders in December also supported risk appetite on Tuesday.
With the stats on positive in the week, support from the PBoC at the start of the week added to the jump in demand for riskier assets.
Mid-week, the Chinese government announced a cut in tariffs on U.S goods that also positive news.
Concerns over the likely effect of the coronavirus on near-term growth lingered, however.
Freddie Mac Rates
The weekly average rates for new mortgages as of 6th February were quoted by Freddie Mac to be:
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30-year fixed rates decreased by 6 basis points to 3.45% in the week. Rates were down from 4.41% from a year ago. The average fee remained unchanged at 0.7 points.
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15-year fixed rates fell by 3 basis points to 2.97% in the week. Rates were down from 3.84% compared with a year ago. The average fee also held steady at 0.7 points.
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5-year fixed rates increased by 8 basis points to 3.32% in the week. Rates were down by 59 points from last year’s 3.91%. The average fee fell from 0.3 to 0.2 points.
According to Freddie Mac, the markets staged a rebound in the week, supported by increases in manufacturing and service sector activity. The combination of very low mortgage rates, a strong economy, and more positive financial market sentiment all point to an upbeat home purchase demand outlook.