Mortgage Rates Fluctuate
The week before last, disappointing economic data significantly increased investor concerns about slowing economic growth. However, worries about a possible recession eased last week due to unexpected strength in the economic reports. As a result, after a substantial decline the week before last, mortgage rates moved modestly higher last week.
Services Sector Remains Resilient
The most significant economic report released last week from the Institute of Supply Management revealed unexpected strength. The ISM national services sector index jumped from 48.8 to 51.4, beating the consensus forecast. Since readings above 50 indicate an expansion in the sector and below 50 a contraction, this report indicates that consumer demand for services remains resilient despite higher prices.
A Strong Labor Market
The Department of Labor releases the total number of new claims for unemployment insurance each week. The latest reading was 233,000, below the consensus forecast and down from a surprisingly large figure of 250,000 the previous week. This decline suggests that the higher levels over the last couple of weeks were mostly due to disruptions from Hurricane Beryl rather than underlying weakness in the labor market. The bigger picture is that this was far below the inflated figures seen during the early months of the pandemic and in line with the levels typical during 2019. Weekly jobless claims are important because they are one of the timeliest indicators of labor market trends.
Mortgage Refinance Applications Surge
Mortgage applications benefited from lower rates last week. According to the latest data from the Mortgage Bankers Association (MBA), applications to refinance jumped 16% from last week and were a massive 59% higher than one year ago. Purchase applications rose just 1% from the prior week and still were down 11% from last year at this time.
Mortgage Rates for the week of 8-12-2024