Mortgage rates saw the downward trend resume in the week ending 21st May, delivering a 5th weekly decline in 9-weeks.
30-Year fixed rates fell by 4 basis points to 3.24%. In the previous week, mortgage rates had risen by 2 basis points to 3.28%.
The pullback left mortgage rates close to an all-time low in the week.
Compared to this time last year, 30-year fixed rates were down by 82 basis points.
30-year fixed rates were also down by 170 basis points since November 2018’s most recent peak of 4.94%.
Economic Data from the Week
Economic data was on the lighter side in the 1st half of the week. May’s prelim private sector PMIs, the Philly FED Manufacturing PMI, and the weekly jobless claims were in focus.
While private-sector numbers showed a slower pace of contraction, it was the weekly jobless claims that raised another red flag.
Initial jobless claims jumped by 2.438m in the week ending 15th May. The markets had hoped for a marked decline in response to an easing in lockdown measures.
On the monetary policy front, FED Chair Powell delivered a speech ahead of the week, while also giving testimony to lawmakers.
The FED Chair assured the markets that the FED had plenty of ammo to support the economic recovery late on Sunday. On Tuesday, the FED Chair did predict, however, that the economy would not fully recover until the end of 2021.
On Wednesday, the FOMC meeting minutes provided few surprises. The markets expect that monetary policy will see further easing before any tightening.
Of less influence in the week were housing sector numbers for April.
Building permits and housing starts slid by 20.8% and by 30.2% in April, month-on-month. Existing home sales also took a hit, with a 17.8% slide. The dire numbers came as lockdown measures hit housing sector activity in the month.
Since then, a pickup in purchase activity has been evident, limiting the effect of the numbers in the week.
On the geopolitical front, however, rising tensions between the U.S and China did provide some support for U.S Treasuries.
Concerns over the economic outlook and the FED’s somber assessment ultimately delivered the downside in rates.
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