Mortgage rates resumed a downward trend in the week ending 19th July, to leave mortgage rates down in six of the last 8-weeks, according to figures released by Freddie Mac.
While the trend was downward through the week, the moves were relatively minor compared with some of the weekly fluctuations, with the general trend in mortgage rates over the last 8-weeks an unexpected positive for prospective home buyers and even for existing home owners looking to refinance.
Economic data released out of the U.S through the week included a rebound in industrial production in June, supporting a pickup in manufacturing activity in Philly, according to PMI numbers released on Thursday and steady manufacturing activity in NY State, with the Beige Book reflecting an upbeat U.S economy going into the 3rd quarter.
Elsewhere, retail sales figures didn’t disappoint, though particularly weak housing sector data released on Wednesday will have been a concern on the supply side, June building permit and housing starts on the slide, housing starts tumbling by a whopping 12.3%.
While labour market continues to tighten and the shortage of skilled workers becomes an ever increasing issue, the lack of wage growth continues to be the stumbling block for the U.S worker. Falling mortgage rates will be considered a positive, though the inventory side of the equation continues to be an issue for prospective home buyers, with limited supply and rising demand likely to further inflate house prices, particularly if mortgage rates continue to hold steady.
FED Chair Powell’s testimony to Congress on Tuesday and Wednesday pointed for rate hikes to continue on a 3-monthly basis, which suggests that the recent downward trend is unlikely to continue through to the end of the year, with policy normalization supporting a move through to 5% levels, though much will depend on the trade war and what impact there will be on the U.S economy.
The upbeat sentiment towards the U.S economy would have normally seen U.S Treasury yields rally, but U.S Treasuries have seen a significant rise in demand in recent months, with concerns over the trade war with China and the U.S President’s diplomatic skills weighing on risk appetite. At some point, one would expect the trade war to come to an end and, once it does, rising interest rates and a positive economic outlook, assuming the trade war doesn’t cause too much damage, spells one thing for prospective home owners and for those looking to refinance.
Freddie Mac weekly average rates for new mortgages as of 19th July were quoted to be: