Mortgage rates fell for the 9th time in 13-weeks and for a fourth straight week in the week ending 22nd July

Following a 2 basis points decline from the previous week, 30-year fixed rates decreased by 10 basis points to 2.78%.

Since 21st April, 30-year mortgage rates had risen just once beyond the 3% mark before the current pullback.

Compared to this time last year, 30-year fixed rates were down by 23 basis points.

30-year fixed rates were still down by 216 basis points since November 2018’s last peak of 4.94%.

Economic Data from the Week

It was a quiet first half of the week on the U.S economic calendar.

U.S economic data was limited to housing start and building permit figures for June. The numbers had a muted impact on U.S Treasury yields, with risk aversion plaguing the markets in the early part of the week.

Concerns over the continued spread of the Delta variant and its impact on the global economic recovery weighed on yields.

Freddie Mac Rates

The weekly average rates for new mortgages as of 22nd July were quoted by Freddie Mac to be:

30-year fixed rates fell by 10 basis points to 2.78% in the week. This time last year, rates had stood at 3.01%. The average fee remained unchanged at 0.7 points.
15-year fixed declined by 10 basis points to 2.12% in the week. Rates were down by 42 basis points from 2.54% a year ago. The average fee rose from 0.6 points 0.7 points.
5-year fixed rates rose by 2 basis point to 2.49%. Rates were down by 60 points from 3.09% a year ago. The average fee rose from 0.3 points to 0.4 points.

According to Freddie Mac,

Concerns over the Delta variant, and the overall trajectory of the pandemic, are undoubtedly affecting economic growth.
While the economy continues to mend, Treasury yields have decreased and mortgage rates have followed suit.
Unfortunately, many homebuyers are unable to take advantage of low rates due to tight inventories and high prices.

Mortgage Bankers’ Association Rates

For the week ending 16th July, the rates were:

Average interest rates for 30-year fixed with conforming loan balances increased from 3.09% to 3.11%. Points increased from 0.37 to 0.43 (incl. origination fee) for 80% LTV loans.
Average 30-year fixed mortgage rates backed by FHA decreased from 3.15% to 3.08%. Points rose from 0.29 to 0.31 (incl. origination fee) for 80% LTV loans.
Average 30-year rates for jumbo loan balances decreased from 3.16% to 3.13%. Points increased from 0.27 to 0.32 (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, fell by 4.0% in the week ending 16th July. In the week prior, the index had jumped by 16.0%.

The Refinance Index declined by 3% and was down 18% on the same week a year ago. The Index had surged by 20% in the previous week.

In the week ending 16th July, the refinance share of mortgage activity increased from 64.1% to 64.9%. The share had risen from has 61.6 to 64.1% in the previous week.

According to the MBA,

The 10-year Treasury yield dropped sharply last week, in part due to investors becoming more concerned about the spread of COVID variants and their impact on global economic growth.
On a seasonally adjusted basis, mortgage applications were lower compared to the 4th July holiday week.
Purchase applications fell back to near their lowest levels since May 2020.
Limited inventory and higher prices are keeping some prospective homebuyers out of the market.
Refinance activity fell over the week, though the pace of applications was close to its highest level since early May.

For the week ahead

It’s a busier first half of the week. Economic data includes durable goods and consumer confidence figures early in the week.

Expect the consumer confidence figures to be key.

The main event of the week, however, is the FOMC monetary policy decision and press conference on Wednesday.

Away from the economic calendar, COVID-19 news updates will also continue to influence.

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