What’s Ahead For Mortgage Rates This Week – December 21, 2020
Last week’s scheduled economic reporting included readings from the National Association of Home Builders and a statement from the Federal Reserve’s Federal Open Market Committee. Weekly readings on mortgage rates and jobless claims were also released.
NAHB: Builder Confidence Falls In December
Homebuilder confidence in market conditions for single-family dropped by four points in December to an index reading of 86. December’s reading was the second-highest on record after November’s reading. Component readings of the Housing Market Index also dropped. Builder confidence in current market conditions fell to 92 as confidence in single-family home sales within the next six months fell to an index reading of 85. Homebuilder confidence in buyer traffic in new single-family developments dropped to 73; buyer traffic readings rarely exceeded 50 until recent months.
Regional Housing Market Index readings were also lower than in November. The Northeast, Midwest, and South reported readings three points lower than in November. The Western region’s reading dipped by two points month-over-month.
Fed Holds Key Rate Steady
The Federal Open Market Committee of the Federal Reserve announced no change to the current federal funds rate range of 0.00 to 0.25 percent. Citing severe economic challenges caused by the Covid-19 pandemic, the FOMC statement indicated that economic forecasts would be subject to the course of the virus and related impacts on public health, the economy, and labor markets.
The Committee stated its monetary policy would be flexible in response to the pandemic and the Federal Reserve’s dual mandate of achieving maximum employment and an inflation rate of two percent. The inflation rate has fallen short of the Fed’s objective of two percent; FOMC members amended the inflation rate goal to two percent or higher to compensate for the impact of repeated readings under the two percent mandate.
Mortgage Rates Hit Record Low; Jobless Claims Mixed
Freddie Mac reported new record lows for average mortgage rates last week. Rates for 30-year fixed-rate mortgages averaged four basis points lower at 2.67 percent. Rates for 15-year fixed-rate mortgages averaged 2.21 percent and were five basis points lower. The average rate for 5/1 adjustable rate mortgages was unchanged at 2.79 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.60 percent for 15-year fixed-rate mortgages, and 0.30 percent for 5/1 adjustable rate mortgages.
New jobless claims rose to 885,000 first-time claims filed as compared to 862,000 new claims filed the prior week. 5.51 million ongoing jobless claims were filed; last week’s reading was lower than the prior week’s reading of 5.78 ongoing jobless claims filed.
What’s Ahead
This week’s scheduled economic news includes readings on sales of new and previously-owned homes, inflation, and consumer sentiment. Weekly reports on mortgage rates and jobless claims will also be released.
Many homeowners do not realize that the risk of a flood is a significant factor that plays a role in not only homeownership but also the closing process. Even though flooding is a major risk, many homeowners do not carry enough coverage. Without proper flood insurance, homeowners risk losing millions of dollars. Therefore, it is prudent for those who are looking for a home to factor flood insurance into their home search. This can streamline the closing process down the road.
There are a lot of people who have spotted the record-low mortgage rates right now and are wondering if they can refinance successfully. While many people apply for a refinance of their current home loan, not everyone will be approved. Furthermore, a home refinance is not the best option for everyone. Those who want to qualify for record-low refinance rates need to keep a few key points in mind.