US Mortgage Rates Fall for a Third Consecutive Week

In the week ending June 2, mortgage rates fell for the fourth time in thirteen weeks.

30-year fixed rates slipped by 1 basis point to 5.09%. 30-year fixed rates slid by 15 basis points in the week prior.

Year-on-year, 30-year fixed rates were up by 210 basis points.

30-year fixed rates were up by 15 basis points since November 2018’s last peak of 4.94%.

Economic Data from the Week

In the first half of the week, consumer confidence and private sector PMIs were in focus.

The CB Consumer Confidence Index fell from 108.6 to 106.4 in May. Forecasts were for a larger decline to 103.9.

Manufacturing sector PMI numbers also came in better than expected.

The ISM manufacturing PMI rose from 55.4 to 56.1, easing market concerns of an economic recession. Economists forecast a fall to 54.5.

Freddie Mac Rates

The weekly average rates for new mortgages, as of June 2, 2022, were quoted by Freddie Mac to be:

• 30-year fixed rates slipped by 1 basis point to 5.09%. This time last year, rates stood at 2.99%. The average fee declined from 0.9 points to 0.8 points.

• 15-year fixed rates rose by 1 basis point to 4.32% in the week. Rates were up by 205 basis points from 2.27% a year ago. The average fee remained unchanged at 0.8 points.

• 5-year fixed rates slid by 16 basis points to 4.04%. Rates were up by 140 basis points from 2.64% a year ago. The average fee remained unchanged at 0.3 points.

According to Freddie Mac,

• Mortgage rates continued to decline but remained higher than last year, impacting affordability and purchase demand.
• Going into the summer, housing supply is on the rise with the housing market normalizing.
• A fall in the homebuyer pool has eased market tightness experienced in recent times.

Mortgage Bankers’ Association Rates

For the week ending May 27, 2022, the rates were:

• Average interest rates for 30-year fixed with conforming loan balances decreased from 5.46% to 5.33%. Points fell from 0.60 to 0.51 (incl. origination fee) for 80% LTV loans.
• Average 30-year fixed mortgage rates backed by FHA decreased from 5.36% to 5.20%. Points fell from 0.82 to 0.69 (incl. origination fee) for 80% LTV loans.
• Average 30-year rates for jumbo loan balances declined from 5.02% to 4.93%. Points remained unchanged at 0.41 (incl. origination fee) for 80% LTV loans.

Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, a measure of mortgage loan application volume, decreased by 2.3%. The index fell by 1.2% in the previous week.

The Refinance Index declined by 5% and was 75% lower than the same week one year ago. In the week prior, the Index fell by 4%.

The refinance share of mortgage activity decreased from 32.3% to 31.5%. In the previous week, the share declined from 33.0% to 32.3%.

According to the MBA,

• Mortgage rates declined for the fourth time in five weeks, with concerns over the economy and equity market sell-off weighing on Treasury yields.
• The downward trend left mortgage rates at their lowest level since December 2018.
• With mortgage rates still elevated, the refinance market continues to shrink.
• Demand is higher at the upper end of the housing market, which is affected less by supply and affordability issues.

For the week ahead

It’s a quiet first half of the week in the week ending June 10.

There are no material stats for the markets to consider following last week’s nonfarm payroll numbers for May.

The lack of stats will leave US Treasuries and mortgage rates in the hands of market risk appetite and sentiment towards Fed monetary policy.

Early in the week, China’s service sector PMI numbers on Monday and trade data on Wednesday will influence market risk appetite.