U.S Mortgage Rates Fall to a 16th Record Low of the Year ahead of the Holidays
Mortgage rates fell to a 16th record low for the year after falling 4 basis points to a 15th record low the previous week.
Compared to this time last year, the 30-year fixed interest rate was down 108 basis points.
The 30-year fixed rate has also fallen by 228 basis points since the last high of 4.94% in November 2018.
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Economic data of the week
Economic data was busier for the first half of the week.
November's focus was on personal spending, inflation and core durable goods orders, as well as consumer confidence and unemployment claims.
In terms of economic data, it was a mixed bag. Consumer confidence waned in December while initial unemployment claims fell from 892,000 to 805,000.
Core annual inflation remained stable at 1.4%, while personal spending declined by a more than expected 0.4%.
However, durable and core durable goods orders continued to surge after the October jump, supporting riskier assets.
From Capitol Hill, advances toward a COVID-19 stimulus package were risk-positive while concerns over COVID-19 and news of new strains tested support during the week.
Later in the week, U.S. President Trump refused to sign the COVID-19 stimulus package. Hopes for a better package propped riskier assets mid-week before news of lawmakers rejecting Trump's demands hit the wires.
Freddie Mac Awards
The weekly average new mortgage rates as of December 24th were given by Freddie Mac as follows:
The 30-year fixed rate fell 1 basis point to a new low of 2.66% for the week. At this time last year the rate was 3.74%. The average fee remained constant at 0.7 points.
The 15-year fixed rate fell 2 basis points for the week to 2.19%. Interest rates fell by 100 basis points from 3.19% in the previous year. The average fee fell from 0.6 points to 0.5 points.
The 5-year fixed interest rate remained constant at 2.79% for the second week in a row. The rates fell by 66 points from 3.45% in the previous year. The average fee fell from 0.3 points to 0.2 points.
According to Freddie Mac
The real estate market is set to end the year strong as low mortgage rates continue to fuel homebuyer demand.
Refinancing activity also remains robust as mortgage rates are at record lows.
Freddie Mac expects interest rates to remain stable in 2021. However, a major driver in the short term will be the development of the COVID-19 pandemic and the implementation of the vaccine.
Mortgage lender association rates
For the week ending December 18, the prices were:
The 30-year average interest rate set on conforming loan balances increased from 2.85% to 2.86%. The points for 80% LTV loans remained unchanged at 0.33 (including origination fee).
The 30-year average interest rates supported by the FHA decreased from 2.96% to 2.90%. For 80% LTV loans, the points fell from 0.42 to 0.32 (including origination fee).
The 30-year average jumbo loan balance decreased from 3.12% to 3.10%. The points for 80% LTV loans decreased from 0.33 to 0.29 (including origination fee).
The weekly numbers released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of the volume of mortgage loan applications, rose 0.8% for the week ended December 18. The week before, the index was up 1.1%.
The refinancing index rose 4% and was 124% higher than the same week a year ago. The week before, the index was up 1%.
The refinancing share of mortgage activity rose from 72.7 to 74.8%. In the previous week the proportion had risen from 72.0% to 72.7%.
According to the MBA
Mortgage rates close the year at record lows. The 30-year fixed interest rate is 2.86%, a full percentage point below the previous year's value.
Purchase requests fell for the second time in 3 weeks, but remained 26% higher than the same week a year ago.
The average loan balance hit another record high.
Numbers for the week ending December 25th and January 1st will be available on January 6th, 2021.
For the coming week
It's a relatively quiet first half of a shortened week on the US economic calendar.
Key stats include November trading data and December PMI numbers in Chicago. However, we don't expect too much influence from the statistics.
COVID-19 news updates and market sentiment over the COVID-19 stimulus package are likely to remain the main drivers.
This article was originally published on FX Empire
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