US mortgage rates rise for fifth straight week on Fed policy

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During the week ending April 7, 2022, mortgage rates increased for a fifth consecutive week.

30-year fixed rates rose 5 basis points to 4.72%. 30-year fixed rates jumped 25 basis points the previous week. This was the highest mortgage rate since 4.75% on December 5, 2018.

Over one year, 30-year fixed rates are up 159 basis points.

30-year fixed rates are down 22 basis points since the last peak in November 2018 at 4.94%.

Economic data of the week

During the first half of the week, the focus was on factory orders and service sector PMIs.

The statistics were mixed. Factory orders fell 0.5% in February, partially reversing a 1.5% rise from January, while activity in the services sector improved.

In March, the market-preferred non-manufacturing ISM PMI fell from 56.5 to 58.3.

Along with the positive data for the dollar, the FOMC meeting minutes were also positive for the dollar in the middle of the week. More hawkish minutes than expected pushed US Treasury yields north. The minutes revealed plans to begin trimming the Fed’s balance sheet by $95 billion a month in an environment of rising interest rates to rein in inflation.

Freddie Mac Pricing

Average weekly rates for new mortgages, as of April 7, 2022, were quoted by Freddie Mac be:

  • 30-year fixed rates rose 5 basis points to 4.72% in the week. This time last year, rates stood at 3.13%. The average fee remained unchanged at 0.8 points.
  • 15-year fixed rates rose 8 basis points to 3.91% in the week. Rates rose 149 basis points from 2.42% a year ago. The average fee remained unchanged at 0.8 points.
  • 5-year fixed rates rose 6 basis points to 3.56%. Rates rose 64 basis points from 2.92% a year ago. The average commission remained unchanged at 0.3 points.

According to Freddie Mac,

  • Mortgage rates have seen the fastest 3-month rise since May 1994.
  • Rising mortgage rates hit buying demand.
  • Monthly payments for those looking to buy a home are up at least 20% from a year ago.

Mortgage Bankers Association Rates

For the week ending April 1, 2022, the rates have been:

  • Fixed 30-year average interest rates with conforming loan balances have increased from 4.80% to 4.90%. Points increased from 0.56 to 0.53 (origination fee included) for 80% LTV loans.
  • Average FHA-backed 30-year fixed mortgage rates fell from 4.66% to 4.90%. Points increased from 0.71 to 0.68 (origination fee included) for 80% LTV loans.
  • The 30-year average rates for jumbo loan balances fell from 4.40% to 4.51%. Points increased from 0.44 to 0.34 (origination fee included) for 80% LTV loans.

Weekly figures released by the Mortgage Bankers Association showed the Composite Market Index, a measure of mortgage application volume, fell 6.3% in the week ending April 1. The index fell 6.8% the previous week.

The refinancing index slipped 10% and was 62% lower than the same week a year ago. During the previous week, the index had fallen by 15%.

The refinancing share of mortgage activity fell from 40.6% to 38.8% of total applications. The previous week, the share fell from 44.8% to 40.6%.

According to the MBA,

  • The volume of mortgage applications continues to decline due to the rise in mortgage rates, stimulated by sentiment towards monetary policy.
  • As higher rates reduce the incentive to refinance, the volume of applications has fallen to its lowest level since spring 2019.
  • A strong labor market and rising wages supported housing demand despite soaring mortgage rates and rising house prices.
  • Inventories, however, continue to dampen buying activity.

For the coming week

The week begins with inflation figures due on Tuesday. Expect a lot of market sensitivity to the numbers after the minutes from last week’s hawkish FOMC meeting.

On Wednesday, wholesale inflation figures will also be of interest.

Outside of economic data, Russia and Ukraine will remain an area of ​​focus for global financial markets.

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