Mortgage rates from Freddie Mac and the MBA

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.

PMMS 7/22/2021

The average 30-year fixed-rate mortgage sank 10 basis points to 2.78% for the week ending on July 22, continuing several weeks of declines.

According to Sam Khater, Freddie Mac’s chief economist, concerns about the COVID-19 Delta variant and the recovery from the pandemic are taking their toll on economic growth.

While the economy continues to mend, Treasury yields have decreased, and mortgage rates have followed suit, said Khater. “Unfortunately, many homebuyers are unable to take advantage of low rates due to low inventory and high prices.”

While prospective homebuyers face a tough market, Khater added that declining mortgage rates give homeowners the chance to refinance and reduce their monthly payments.

Mortgage rates have mostly remained below 3% this year, despite predictions that they would return to higher levels earlier. Economists and investors are closely monitoring any indication from the Federal Reserve that it may begin tapering of mortgage backed securities and bond purchases.

MBA 7/21/2021

Mortgage applications decreased 4% for the week ending July 16, just one week after applications jumped 16% on the strength of falling mortgage rates.

The 10-year Treasury yield dropped sharply last week, in part due to investors becoming more concerned about the spread of COVID variants and their impact on global economic growth. This, in turn, led to mixed changes in mortgage rates.

“The 30-year fixed rate increased slightly to 3.11% after two weeks of declines, and other surveyed rates moved lower, with the 15-year fixed rate loan — used by around 20% of refinance borrowers — decreasing to 2.46%,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “That’s the lowest level since January 2021.”

Kan added that, on a seasonally adjusted basis compared to the July 4th holiday week, purchase applications dipped back to near their lowest levels since May 2020.

Limited inventory and higher prices are keeping some prospective homebuyers out of the market,” Kan said. “Refinance activity fell over the week, but because rates have stayed relatively low, the pace of applications was close to its highest level since early May 2021.”

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PMMS 7/15/2021

The average 30-year fixed-rate mortgage fell two basis points from the week prior to 2.88%. According to Sam Khater, Freddie Mac’s chief economist, the decline provides modest relief to those who are looking to buy homes in a tough market, with scant inventory and mounting home price appreciation.

“The summer swoon in mortgage rates continues as the 30-year fixed-rate mortgage fell for the third consecutive week,” Khater said. “Since their peak at 3.18% in April, mortgage rates have declined by thirty basis points.”

Mortgage rates have been hovering around 3% for several months. Economists and investors are closely watching for any indication that the Federal Reserve may change its position on the tapering of mortgage backed securities and bond purchases.

During testimony to the U.S. House of Representatives Financial Services Committee on Wednesday, Federal Reserve Chair Jerome Powell pushed back at Republican lawmakers’ concerns about volatility in the prices of some goods, including lumber. High inflation, Powell said, is limited to “a small group of goods and services directly tied to the reopening,” and the U.S. central bank’s bond buying will continue until there is substantial progress on jobs.

Tapering the U.S. central bank’s $120 billion in monthly bond purchases, is “still a ways off,” Powell said. “If we continue to make progress on our goals we’ll reduce those purchases,” he said. Powell is scheduled to testify in front of the U.S. Senate Banking Committee Thursday morning.

Since March 2020, the Fed’s asset purchases have been split between $80 billion of U.S. Treasury bonds and $40 billion of mortgage backed securities each month, keeping the cost of long-term borrowing low. 

MBA 7/14/2021

After several consecutive weeks of drops, mortgage applications jumped 16% for the week ending July 9, 2021. The prior week‘s report showed a 1.8% drop in applications to the lowest level since January 2020. The sudden increase in applications was driven “heavily” by increased refinancing as mortgage rates dipped again, said Joel Kan, MBA associate vice president of economic and industry forecasting.

“Treasury yields have trended lower over the past month as investors remained concerned about the COVID-19 variant and slowing economic growth,” Kan said. “There also may have been a delayed spillover of applications from the previous week, when rates also decreased but there was not much of response in terms of refinance applications.”

Those lower rates may be helping some homebuyers close on their purchases, especially first-time homebuyers, Kan said.

“We continue to see ebbs and flows as housing demand remains strong, but for-sale inventory remains low,” he said. “The year-over-year comparisons were down significantly for both purchase and refinance applications.”

The sheer amount of bidding wars decreased from May to June, per a study released this week from Redfin, as more homes for sale have hit the market in the past month. Overall inventory is still low, of course, but a cooling of the market could lead to more would-be buyers and an increase in mortgage applications soon, experts said.

PMMS 7/8/2021

The average 30-year fixed-rate mortgage fell eight basis points from the week prior to 2.9%. According to Sam Khater, Freddie Mac’s chief economist, last week’s dip followed the concurrent drop in U.S. Treasury yields earlier this week.

“While mortgage rates tend to follow Treasury yields closely, other factors can be impactful such as the labor markets, which are continuing to improve per last week’s jobs report,” said Khater. “We expect economic growth to gradually drive interest rates higher, but homebuyers and refinance borrowers still have an opportunity to take advantage of 30-year rates that are expected to continue to hover around three percent.”

Mortgage rates have been in a state of limbo for several months now. Economists and investors are closely watching for any indication that the Federal Reserve may change its position on the tapering of assets. Minutes released on Wednesday of the Fed’s June FOMC meeting revealed the conversation may be happening sooner rather than later.

Several Fed officials said they would like to reduce the pace of purchasing mortgage securities “more quickly or earlier” in light of skyrocketing home prices. But other Fed officials pushed back, saying that it was preferable to gradually slow down the purchases. Since March 2020, the Fed’s asset purchases are split between $80 billion of Treasurys and $40 billion of agency MBS each month, keeping interest rates low.

MBA 7/7/2021

Mortgage applications decreased again, this time falling 1.8% in the week ending July 2, 2021. This marks the third straight week of application declines, and represents the lowest level since the January 2020.

“Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which showed ongoing improvements in the labor market,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “However, rates continued to move lower, especially late in the week.”

Kan said 30-year mortgage rates were 11 basis points lower than the same week a year ago, and refinance applications have trended lower than 2020 levels for the past four months.

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