US mortgage rates jump on stimulus and COVID-19 vaccination news

Mortgage rates were on the rise for a 2sd week in a row, 30-year fixed rates jumping 14 basis points to 2.79%.

Compared to the same period last year, fixed 30-year rates fell 86 basis points.

Fixed 30-year rates have also fallen 215 basis points since the last peak in November 2018 to 4.94%.

Economic data of the week

Through the 1st half the week, economic data from the United States was lighter. Key statistics included JOLT’s job postings and inflation figures.

While JOLT’s job openings declined in November, the annual core inflation rate remained stable at 1.6%. The statistics had a mixed impact over the week, however.

Since Capitol Hill, the planned deployment of a major stimulus package and ongoing vaccinations have supported riskier assets.

Freddie Mac Pricing

Average weekly rates for new mortgages at the 14e January were cited by Freddie mac to be:

  • Fixed 30-year rates jumped 14 basis points to 2.79% on the week. Around the same time last year, rates were 3.65%. The average commission remained stable at 0.7 points.
  • 15-year fixed rates rose 7 basis points to 2.23% on the week. Rates were down 86 basis points from 3.09% a year ago. The average commission went from 0.6 point to 0.7 point.
  • 5-year fixed rates jumped 37 basis points to 3.12%. Rates fell 27 points from 3.39% a year ago. The average commission went from 0.3 point to 0.4 point.

According to Freddie Mac,

  • A rise in US Treasury yields earlier in the year pushed mortgage rates higher for the week.
  • While rates are expected to increase slightly in 2021, they will remain unmistakably low, supporting homebuyer demand and mortgage refinancing.
  • Borrowers are smart to take advantage of these low rates now and will.

Mortgage Bankers Association rate

For the week ending 8the January, the rates were:

  • The 30-year average interest rates on compliant loan balances fell from 2.86% to 2.88%. Points increased from 0.35 to 0.33 (including origination fees) for LTV loans at 80%.
  • The 30-year average fixed mortgage rates guaranteed by the FHA fell from 2.90% to 2.93%. Points increased from 0.33 to 0.32 (including origination fees) for LTV loans at 80%.

Weekly figures released by the Mortgage Bankers Association showed that the Composite Market Index, which is a measure of the volume of mortgage applications, jumped 16.7% in the week ending the 8th.e January. In the previous 2 weeks, the index had fallen 4.2%.

The refinancing index jumped 20% and was 93% higher than the same week a year ago. During the 2 weeks to 1st January, the index fell 6%.

In the week ending 8the In January, the refinancing share of mortgage activity rose from 73.5% of total applications to 74.8%.

According to the MBA,

  • The boom in refinancing activity in the first full week of 2021 has pushed mortgage applications to their highest level since March-2020.
  • The expectation of further fiscal stimulus and the deployment of vaccines have improved the economic outlook. This led to a surge in Treasury yields which pushed mortgage rates north.
  • Even with the rise in mortgage rates, refinancing did not slow down at the start of the year.
  • Sustained demand for housing continued to support buying growth, with activity increasing nearly 10% from a year ago.

For the coming week

It’s a particularly quiet first half of the week on the US economic calendar. There are no important statistics from the United States to provide guidance for US Treasuries and mortgage rates.

A lack of statistics will leave returns in the hands of COVID-19 news, Capitol Hill talks and economic data from the previous week.

Last week’s disappointing jobless claims and retail sales figures will set the tone for the week.

Monday 4e GDP figures for the quarter from China will also have an influence.

Ultimately, however, with the details of the U.S. stimulus package now known, news of COVID-19 will remain a key factor.


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