U.S. mortgage rates have dropped to new all-time lows

US mortgage rates fell for a second consecutive week to an all-time low when mortgage applications spiked amid economic and gloomy conditions.

Mortgage rates fell for the 2nd consecutive week in the week ending on May 28, bringing the 6th weekly decline in 10 weeks.

The 30-year fixed rate dropped 9 basis points to an all-time low of 3.15%. Last week, mortgage interest rates dropped by 4 basis points to 3.24%.

Compared to this time last year, the 30-year fixed rate was down 84 basis points.

The 30-year fixed rate has also dropped by 179 basis points since November 2018, the most recent peak of 4.94%.

Economic data for the week

Economic data was slightly lower in the first half of the week. The number of possible consumer confidence and weekly unemployment claims are the main factors.

Consumer confidence sees only marginal improvement, with concerns about labor market conditions weighing.

Weekly unemployment claims came higher than forecast on Thursday. Despite an increase of 2,123m, this figure is lower than the higher figure seen in recent weeks providing some support for more risky assets.

Leaving the economic calendar, the continued easing of lock measures and progress towards vaccine-backed Treasury production.

However, the negative sentiment towards increased tension between the United States and China has lasted.

Finally, the relationship between interest rates and mortgage rates was broken during the week. The constant increase in mortgages in patience has contributed to downward pressure on mortgage rates. According to the MBA, the total number of unsecured loans increased from 8.16% of the server's portfolio to 8.36% as of May 17.

Price Freddie Mac

The average weekly rate for new mortgages since May 28 cited by Freddie Mac is:

The 30-year fixed rate dropped 9 basis points to 3.15% during the week. The rate has decreased from 3.99% compared to a year ago. The average fee increased from 0.7 to 0.8 points.
The 15-year fix dropped 8 basis points to 2.62% for the week. The rate has decreased from 3.46% compared to a year ago. The average fee does not change at 0.7 points.
The 5-year fixed rate dropped 4 basis points to 3.13% for the week. The rate has decreased by 47 points compared to last year, 3.60%. The average fee does not change at 0.4 points.
According to Freddie Mac, mortgage rates have dropped to a record low for the third time in just the past few months.

The downward trend that has impacted buying demand has rebounded from a 35% decline in mid-April to an increase of 8% from the previous week, compared to the same period last year.

This is a recovery considering the current economic environment. Freddie Mac also noted that refinancing activity still increased, with the average loan size of refinancing borrowers seeing a reduction of $ 70,000 this year.

Mortgage Bankers Association

For the week ending in May 22, prices were quoted as:

The average interest rate over the 30-year fixed, supported by the FHA, fell from 3.46 to 3.41%. The point decreases from 0.33 to 0.30 (including origin fee) for an 80% LTV loan.
The average interest rate over 30 years fixed with the appropriate lending balance increased from 3.41% to 3.42%. The score remains unchanged at 0.33 (including origin fee) for an 80% LTV loan.
The 30-year average interest rate for the huge loan balance increased from 3.66% to 3.71. The point decreases from 0.37 to 0.29 (including origin fee) for an 80% LTV loan.
Weekly figures released by the Mortgage Bankers Association show that the General Market Index, a measure of the volume of mortgage applications, rose 2.7% in the week ended May 22. Previously, the index fell by 2.6%.

The refinancing index decreased by 0.2% and was 176% higher than the same period last year. Last week, the Refinancing Index fell 6%.

The refinancing rate of mortgage operations has decreased from 64.3% to 62.6% of the total number of applications during the week. In the previous week, the share has decreased from 67.0% to 64.3% of the total number of applications.

According to the MBA:

Housing activity continues to grow again as more countries reopen, leading to more buyers seeking to continue.
Purchased applications rose 9% last week, marking the sixth weekly increase in a row and an increase of 54% since the beginning of April.
Buying loans have steadily increased in recent weeks and are currently at their highest level since mid-March.
Despite the record low mortgage rate, refinancing is basically flat while still being 176% higher than last year.

For next week

It has a pretty busy first half of the week for Greenback.

Key statistics include ISM production and non-production PMIs and ADP non-farm employment change data.

Markets saw April as the bottom of the economic crisis. Any drop in ISM numbers will boost demand for the US Treasury. However, this may not turn to reducing weekly mortgage rates any more.

In terms of employment, weekly unemployment claims are also showing another significant decline in employment in May. This will make the US Treasury somewhat immune to another slide out of the ADP titles. On Thursday, weekly unemployment requirements and trade data will also be released.

Dropping the statistics, expect the market to focus on the United States and China. COVID-19 numbers and news updates also need follow up. Any uptrend in new coronavirus cases in the US and EU will also test market risk sentiment during the week.

On the positive side, however, it continues to loosen lock-in measures and move towards vaccines.

Continued increases in applications and catastrophic labor market conditions could limit the price drop next week.

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