In the week ending 24th March, mortgage rates rose sharply for a second consecutive week.
30-year fixed rates jumped by 26 basis points to 4.42%. In the week prior, 30-year fixed rates surged by 31 basis points. 30-year fixed rates were at their highest since 4.35% on February-27, 2019.
Year-on-year, 30-year fixed rates were up by 125 basis points.
30-year fixed rates were still down by 52 basis points since November 2018’s last peak of 4.94%.
Economic Data from the Week
It was a quiet first half of the week, with no major stats to provide U.S Treasuries and mortgage rates with direction. Rising crude oil prices and concerns over further supply chain disruption kept inflation in focus.
On the monetary policy front, hawkish Fed Chair chatter supported the upward trend in mortgage rates. Fed Chair Powell talked of a willingness to lift rates more aggressively to curb inflation.
Freddie Mac Rates
The weekly average rates for new mortgages, as of 24th March, were quoted by Freddie Mac to be:
According to Freddie Mac,
Rising inflation, escalating geopolitical uncertainty, and the Fed drove rates higher, reducing consumer purchasing power.
The jump in mortgage rates, coupled with house price appreciation, is increasing monthly mortgage payments and affecting homebuyers’ ability to keep up with the market.
Mortgage Bankers’ Association Rates
For the week ending 18th March, the rates were:
Average interest rates for 30-year fixed with conforming loan balances rose from 4.27% to 4.50%. Points increased from 0.54 to 0.59 (incl. origination fee) for 80% LTV loans.
Average 30-year fixed mortgage rates backed by FHA increased from 4.23% to 4.40%. Points rose from 0.62 to 0.73 (incl. origination fee) for 80% LTV loans.
Average 30-year rates for jumbo loan balances increased from 4.02% to 4.11%. Points rose from 0.37 to 0.51 (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, slid by 8.1% in the week ending March-18. The Index fell by 1.2% in the previous week.
The Refinance Index tumbled by 14% and was 54% lower than the same week a year ago. In the week prior, the Index fell by 3%.
The refinance share of mortgage activity declined from 48.4% to 44.8%. In the previous week, the share decreased from 49.5% to 48.4%.
According to the MBA,
30-year conforming mortgage rates saw the largest weekly increase since March 2020.
The upside came in response to markets pricing in faster rate hikes and expectations of fewer MBS purchases from the FED.
Refinance volume has dropped, with mortgage rates now at 4.5%.
The MBA now forecasts mortgage rates to trend higher through the course of 2022.
Purchase application volume fell modestly, while first time buyers are increasingly challenged by rising house prices and higher mortgage rates.
For the week ahead
Early in the week, consumer confidence and ADP nonfarm payroll figures will draw interest. While the stats will draw attention, crude oil prices, geopolitics, and FOMC member chatter will remain key drivers.
A further uptrend in crude oil prices would push consumer prices even higher, which would force the FED into a more aggressive interest rate path.
This article was originally posted on FX Empire
More From FXEMPIRE:
Source: https://finance.yahoo.com/news/u-mortgage-rates-surge-inflation-041330896.html