US Mortgage Rates Rise for a Sixth Consecutive Week to 6.7%

　　In the week ending September 29, mortgage rates increased for a sixth consecutive week to 6.70%. In the week prior 30-year fixed rates rose by 27 basis points to 6.29%.

　　Following the 41-basis point jump, rates are up 171 basis points from an August 3 low of 4.99%. Year-over-year, 30-year fixed rates were up by 369 basis points to reach a new 2022 peak.

Economic Data from the Week

　　It was a relatively quiet week on the economic calendar, with durable and core durable goods in focus, with consumer confidence.

　　The numbers were upbeat. A sharp pickup in consumer confidence gave the Fed another green light to tackle inflation. The CB Consumer Confidence Index jumped from 103.6 to 108.0.

　　FOMC member chatter also contributed to the upswing in mortgage rates, with members aligned on cranking up interest rates to bring inflation to target.

Freddie Mac Rates

　　The weekly average rates for new mortgages, as of September 29, 2022, were quoted by Freddie Mac to be:

• 　　30-year fixed rates increased by 41 basis points to 6.70%. This time last year, rates stood at 3.01%. The average fee held steady at 0.9 points.

• 　　15-year fixed rates surged by 52 basis points to 5.96%. Rates were up by 368 basis points from 2.28% a year ago. The average fee increased from 1.0 to 1.3 points.

• 　　5-year fixed rates rose by 33 basis points to 5.30%. Rates were up by 282 basis points from 2.48% a year ago. The average fee remained unchanged at 0.4 points.

　　According to Freddie Mac,

• 　　Mortgage rates have doubled over the last year, driven by uncertainty and volatility in the financial markets.

• 　　The impact on a typical mortgage borrower paying at the higher range would be several hundred dollars more than a borrower locked in at the lower range.

• 　　Freddie Mac pointed out that “the dispersion in rates means it has become even more important for homebuyers to shop around with different lenders.”

Mortgage Bankers Association Rates

　　For the week ending September 23, 2022, the rates were:

• 　　Average interest rates for 30-year fixed with conforming loan balances increased from 6.25% to 6.52%. Points jumped from 0.71 to 1.15 (incl. origination fee) for 80% LTV loans.

• 　　Average 30-year fixed mortgage rates backed by FHA rose from 5.85% to 6.17%. Points increased from 1.15 to 1.31 (incl. origination fee) for 80% LTV loans.

• 　　Average 30-year rates for jumbo loan balances increased from 5.79% to 6.01%. Points rose from 0.46 to 0.70 (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, decreased by 3.7% in the week ending September 23. The Index increased by 3.8% in the week prior.

　　The Refinance Index slid by 11% and was 84% lower than the same week one year ago. In the previous week, the Index jumped by 10.%. The refinance share of mortgage activity decreased from 32.5% to 30.2%. In the week prior, the refinance share rose from 30.2% to 32.5% of total applications.

　　According to the MBA,

• 　　Applications for both purchase and refinances fell due to another surge in mortgage rates to multi-year highs.

• 　　More aggressive Federal Reserve policy measures to bring down inflation continue to push mortgage rates higher.

• 　　30-year fixed rates are at their highest level since 2008 and, with rates more than double the rates from a year ago, refinancing activity is at a 22-year low.

For the week ahead

　　It is a busy week ahead with manufacturing and non-manufacturing PMI numbers due on Monday and Wednesday. While the ISM Non-Manufacturing PMI will have the most influence, JOLTs job openings and ADP nonfarm employment change numbers on Tuesday and Wednesday will also draw attention.

　　The Fed has a lot of wriggle room before labor market conditions force the Fed to take its foot off the gas.

　　Following Fridays Core PCE Price Index numbers for August, FOMC member chatter will also influence.