Mortgage rates increased eleven basis points last week according to the Freddie Mac Primary Mortgage Market Survey released on March 12th. This puts the 30-year fixed-rate mortgage back in the low 6% range that it spent much of last month in. However, despite this modest uptick, buyers are responding to rates in this range, with existing home sales increasing 1.7% in February. Purchase applications also increased this week, a welcome sign as buyers enter spring homebuying season with rates down more than half a percentage point compared to the same time last year.
Mortgage applications increased 3.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 6th. “Financial markets were volatile last week amid the ongoing turmoil in the Middle East. Mortgage rates increased on net over the week, while refinance volume was roughly flat. Borrowers in recent weeks were able to get 30-year conforming rates below 6 percent, but with the current volatility, longer-term rates have moved up, pushing up the 30-year fixed rate,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Purchase activity increased last week, particularly for FHA loans, which moved up more than 11 percent. The pace of homebuying continues to track ahead of last year’s pace, with overall purchase volume up 10 percent. More inventory on the market is supporting more transactions.”
The U.S. economy lost jobs in February, a month marred by severe winter weather and a strike at a major health-care provider, the Bureau of Labor Statistics reported last Friday. Nonfarm payrolls fell by 92,000 for the month, compared with the estimate for 50,000 and below the downwardly revised January total of 126,000. At the same time, the unemployment rate edged higher to 4.4% as jobs declined across key areas. A broader measure of unemployment that includes discouraged workers and those holding part-time positions for economic reasons moved lower, to 7.9% or 0.2 percentage point below the January level. “I think it just tells us that the hopes that the labor market was steadying, maybe that was too much,” Mary Daly, president of the Federal Reserve Bank of San Francisco, told CNBC. “We also have inflation printing above target and oil prices rising. How long they last, we don’t know, but both of our goals are risks now and we must keep our eyes on both.”
U.S. consumer prices rose moderately in February as rents maintained a steady pace of increases, though households paid more for gasoline and at the supermarket and higher costs are in store because of the escalating war in the Middle East. The Consumer Price Index report from the Labor Department on Wednesday, which also showed underlying inflation muted last month, covered the period before the U.S. and Israel launched strikes against Iran. Gasoline prices have soared 20% to $3.58 per gallon since the war started, data from motorist advocacy group AAA showed. “A steady inflation reading would probably be a welcome data point on any other day, but against the current backdrop of geopolitical uncertainty and surging oil prices, it may not carry as much weight in the markets, or with the Fed,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
