In the week ending December 29, mortgage rates rose for the first time in seven weeks. 30-year fixed mortgage rates increased by 15 basis points to 6.
In the week ending December 29, mortgage rates rose for the first time in seven weeks. 30-year fixed mortgage rates increased by 15 basis points to 6.42%.
Following the latest increase, 30-year fixed rates are up 143 basis points from the August 3 most recent low of 4.99%. 30-year fixed rates were up 331 basis points year-over-year.
Economic Data from the Week
It was a quiet week on the US economic calendar, with economic indicators limited to housing sector numbers that had a muted impact on yields.
The housing sector numbers reflected the marked shift in conditions as the effects of Fed rate hikes became evident. Pending home sales slid by 4.0% in November, following a 4.6% decline in October.
However, the more hawkish than expected Fed rate hike and economic projections continued to resonate, pushing yields higher.
Freddie Mac Rates
The weekly average rates for new mortgages, as of December 29, 2022, were quoted by Freddie Mac to be:
- 30-year fixed rates increase by 15 basis points to 6.42%. This time last year, rates stood at 3.11%.
- 15-year fixed rates slipped by one basis point to 5.68%. Rates were up by 335 basis points from 2.33% a year ago.
According to Freddie Mac,
- Falling sales, inventories, and house prices left the housing sector on a weaker footing.
- While the pace of decline in sales and the slowdown in house price growth has eased, the outlook remains negative.
- Leading indicators point to weak housing sector conditions throughout the winter.
Mortgage Bankers’ Association Rates
For the week ending December 16, 2022, the rates were:
- Average interest rates for 30-year fixed with conforming loan balances decreased from 6.42% to 6.34%. Points fell from 0.64 to 0.59 (incl. origination fee) for 80% LTV loans.
- Average 30-year fixed mortgage rates backed by FHA decreased from 6.40% to 6.35%. Points declined from 1.03 to 0.99 (incl. origination fee) for 80% LTV loans.
- Average 30-year rates for jumbo loan balances decreased from 6.14% to 5.97%. Points rose from 0.42 to 0.53 (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, increased by 0.9% in the week ending December 16. The Index rose by 3.2% in the week prior.
The Refinance Index increased by 6% from the previous week and was 85% lower than the same week one year ago. In the previous week, the Index increased by 3%.
The refinance share of mortgage activity increased from 29.4% to 31.3%. In the week prior, the refinance share increased from 28.7% to 29.4%.
Figures for December 23 and December 30 will be available on January 4.
For the week ahead
It is a quiet first half of the week, with the US markets closed on Monday. Manufacturing sector PMI numbers for December will draw interest on Tuesday and Wednesday, with the JOLTs job openings also likely to have a material impact on yields.
While revisions to the finalized Markit survey-based PMI number will provide direction on Tuesday, the ISM Manufacturing survey-based PMI and the JOLTs job openings will be the key stats. After the holidays, the focus will return to the Fed. Better-than-expected numbers would push yields higher on bets of a more hawkish Fed through Q1.
From elsewhere, economic data and COVID-19 news from China and geopolitics will also need consideration. While the markets may be able to swallow a weak manufacturing PMI from China, suggestions of reintroducing lockdown measures to curb the latest rise in COVID-19 cases would drive demand for safe havens.
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