Keep up with current rates and related news at HousingWire’s Mortgage Rates Center. Rates are updated twice weekly based on data from the Mortgage Bankers Association (MBA) and Freddie Mac‘s Primary Mortgage Market Survey (PMMS). Freddie Mac’s PMMS only covers purchase mortgages. In addition, the PMMS looks at rates from the first three days of the week from lender websites, while the MBA survey covers the rates on apps collected over the prior full week.
The average 30-year-fixed mortgage rose, ever so slightly, to 2.88% for the week ending Sept. 23. Mortgage rates have been roughly flat for months now.
According to Sam Khater, Freddie Mac’s chief economist, homebuyers are soaking up all available inventory, while home-price growth is also moderating.
“The slowdown in economic growth around the world has caused a flight to the quality of the U.S. financial markets,” said Khater. “This has led to a rise in foreign investor purchases of U.S. Treasuries, causing mortgage rates to remain in place, despite the increasing dispersion of inflation across different consumer goods and services.”
But what little progress builders have made may falter in the months to come.
“The next few months will be choppy as several home builders are signaling that they are going to deliver less supply amid labor and materials shortages,” Khater said.
The week following Labor Day saw a flurry of mortgage loan application activity, with volume jumping by 4.9% for the seven days ending Sept. 17. The increase in application activity is quite different from the MBA’s survey published in early September, which saw application volume decline by 1.9%.
The refi index increased by 7% from the previous week. Joel Kan, associate vice president of economic and industry forecasting at MBA, said that the surge in both refis and purchases was mainly driven by rates that remained low at 3.03%.
“There was a resurgence in mortgage applications the week after Labor Day, with activity overall at its highest level in over a month, and purchase applications jumping to a high last seen in April 2021,” said Kan. “Housing demand is strong heading into the fall, despite fast-rising home prices and low inventory. The inventory situation is improving, with more new homes under construction and more homeowners listing their home for sale.”
The average 30-year-fixed-rate mortgage continues to hover around the 2.86% mark for the week ending Sept. 16. Mortgage rates have remained stagnant for roughly two months, leading economists at Freddie Mac to liken it to “Groundhog Day.”
According to Sam Khater, Freddie Mac’s chief economist, the lack of movement in rates is due to the economic impact of new COVID-19 cases.
“While our collective attention is on the pandemic, fundamental changes in the economy are occurring, such as increased migration, the extended continuation of remote work, increased use of automation, and the focus on a more energy-efficient and resilient economy,” said Khater. “These factors will likely lead to significant investment and new post-pandemic economic models that will spur economic growth.”
Mortgage rates have struggled to reach 3% for much of 2021, despite widespread expectations they’d be in the mid-3s or higher by the third quarter.
While mortgage rates remained unchanged, mortgage loan application volume increased by 0.3% for the week ending Sept. 10.
According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, purchase mortgage application volume is currently at its highest level since April 2021.
“Compared to the same week last September, which was right in the middle of a significant upswing in home purchases, applications were down 11%– the smallest year-over-year decline in 14 weeks,” Kan said. “The very competitive purchase market continues to put upward pressure on sales prices.”
Meanwhile, the refinance share of mortgage activity decreased to 64.9% of total applications from 66.8% last week, the report found.
The average 30-year fixed-rate mortgage was stagnant at 2.88% for the week ending Sept. 9. This week’s near-constant mortgage rates tracked with the 10-year Treasury yield, which rose slightly and then tapered off in the past week. The 10-year Treasury yield for Sept. 8 was 1.35.
According to Sam Khater, chief economist at Freddie Mac, the recent rise in COVID cases has hindered progress in the economy overall.
“While the economy continues to grow, it has lost momentum over the last two months due to the current wave of new COVID cases that has led to weaker employment, lower spending and declining consumer confidence,” said Khater. “Consequently, mortgage rates dropped early this summer and have stayed steady despite increases in inflation caused by supply and demand imbalances.”
“The net result for housing is that these low and stable rates allow consumers more time to find the homes they are looking to purchase,” Khater said.
Mike Fratantoni, senior vice president and chief economist at the MBA, noted that while refinance volume seems to be tapering — which has been a trend in recent months — purchase activity is also lower than expected.
“Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August,” he said. “We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates.” Mortgage rates have stayed just above 3% for the past several weeks.
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