US Mortgage Rates Ahead of FOMC Meeting and Projections

Mortgage rates were again relatively stable, with 30-year fixed rates only falling by 2 basis points. After rising 1 basis point the week before, rates fell by 6^e time in 11 weeks.

In the week ending 16th^e In September, 30-year fixed rates fell by 2 basis points to 2.86%.

30-year mortgage rates have only risen past the 3% mark once since 21^st April.

Compared to the same period last year, fixed 30-year rates have fallen by only one basis point.

Fixed 30-year rates are still down 208 basis points since the last peak in November 2018 at 4.94%.

Economic data of the week

It has been a relatively busy first half of the week, with August inflation figures in the center of attention on Tuesday.

Lower inflation figures pegged mortgage rates during the week.

In August, the annual rate of core inflation in the United States fell from 4.3% to 4.0%. Although weaker, the continued rise in inflation has left a tapered EDF on the table for this year.

Industrial production and data from NY Empire State Manufacturing failed to generate returns on Wednesday despite bullish numbers.

The NY Empire State Manufacturing index fell from 18.3 to 34.3 in September. Industrial production rose 0.4% in August, after rising 0.8% in July.

While the US statistics were bullish, China’s economic data raised even more red flags over China’s economic recovery.

In August, industrial production rose 5.3% year-on-year, compared to 6.4% in July. Investments in fixed assets were also disappointing, up 8.9% from 10.3% in July. Both have been below expectations.

Freddie Mac Pricing

Average weekly rates for new mortgages as of 16^e September were cited by Freddie mac to be:

According to Freddie Mac,

The story continues

• Mortgage rates have remained stable, reflecting market views that the economic outlook has darkened due to the latest spike in new cases of COVID-19.

• However, fundamental changes in the economy are occurring, which will likely lead to significant investments and new post-pandemic business models that will drive economic growth.

• These changes include increased migration, continued remote working, increased use of automation, and the focus on a more energy efficient and resilient economy.

Mortgage Bankers Association rate

For the week ending 10^e September, the rates were:

• The 30-year average interest rates set with compliant loan balances remained unchanged at 3.03%. Points increased from 0.33 to 0.32 (including origination fees) for LTV loans at 80%.

• The 30-year average fixed mortgage rates backed by the FHA fell from 3.07% to 3.04%. Points increased from 0.30 to 0.27 (including origination fees) for LTV loans at 80%.

• The 30-year average rates for jumbo loan balances fell from 3.14% to 3.13%. Points increased from 0.30 to 0.21 (including origination fees) for LTV loans at 80%.

Weekly figures released by the Mortgage Bankers Association showed that the Composite Market Index, which is a measure of the volume of mortgage applications, rose 0.3% in the week ending 10^e September. The previous week, the index had fallen by 1.9%

The refinancing index fell 3% and was 3% lower than the same week a year ago. The index had also fallen 3% the week before.

In the week ending 10^e In September, the refinancing share of mortgage activity fell from 66.8% to 64.9%. The share had remained unchanged at 66.8% the previous week.

According to the MBA,

• Purchase requests, after adjusting for the impact of Labor Day, rose more than 7% to their highest level since April 21.

• Compared with September 2020, which was in the midst of a significant pickup in home purchases, demands were down 11%.

• The average loan amount for a requisition has increased to $ 396,800, with a competitive buying market pushing up selling prices.

• In contrast, refinancing requests fell at their slowest pace since early July.

For the coming week

It’s a quieter week ahead on the economic data front. Economic data is limited to housing sector data which is expected to have a moderate impact on yields.

The market will focus on the FOMC’s monetary policy decision and expected projections on Wednesday evening.

A hawkish Fed would push yields north, which should support a recovery in mortgage rates in the weeks to come.

This article originally appeared on FX Empire

More from FXEMPIRE: