Interest rates on United States mortgages fell slightly in mid-August, but overall borrowing costs remained high. The latest data show that the average interest rate on fixed mortgages declined to 6.67 per cent over a 30-year period, a slight decrease from the previous week. However, long-term United States Treasury debt yields remain high, continuing to limit the downside of mortgage rates.

Small fall in 30-year interest rates

The United States fixed-household loan averaged 6.67 per cent as of the week of 13 August, compared with 6.69 per cent the previous week. The average interest rate on fixed mortgages for a 15-year period fell from 6.01 per cent to 5.96 per cent.

If the 30-year and 15-year mortgage rates were 6.58 per cent and 5.71 per cent, respectively, compared to a year ago, the current level has not returned significantly to lower levels during the year. More high-frequency data also indicate that mortgage rates are still volatile. Mortgage News Daily gave a fixed mortgage interest rate of 6.71 per cent for the 30-year period on 14 August, up two basis points from the previous day, but still close to four weeks low.

  • Based on $400,000, 30-year loans
  • At 6.67 per cent, the monthly rate was approximately $2573.
  • At 5.98 per cent, the monthly rate was approximately $2393.

The difference between the two amounts to approximately US$ 180, which has not been included in the property tax, insurance and other housing costs.

Long-term American debt return is still high.

Interest rates on mortgages usually follow changes in bond markets, particularly as a result of long-term United States Treasury debt yields. The United States Treasury's yield curve shows that the 10-year United States debt return on 14 August was 4.68 per cent, up from 4.63 per cent the previous day. The return on United States debt of 5.25 per cent for both the 20- and 30-year periods shows that the pressure on long-term interest rates has not subsided.

The market would then follow up on the results of the 20-year United States sovereign debt auction, which was seen as an important observation point to test investors ' willingness to continue holding long-term sovereign debt. The latest quarterly financing plan of the United States Department of the Treasury indicated that $42 billion in 20-year sovereign debt would be issued from July to September and that the current nominal interest-rate auction would remain the same.

Inflation slowed, unenabled mortgages became apparent Okay.

Inflationary data have shown some recent cooling. In the United States, the consumer price index rose by 3.4 per cent in July, down from 3.5 per cent in June, and core inflation fell to 2.5 per cent. In July, the producer price index remained the same, but increased by 4.7 per cent over the same period.

The Federal Reserve maintained the benchmark interest rate at between 3.5 and 3.75 per cent on 29 July, but this did not mean that the mortgage rate would fall simultaneously. As long as bond investors continue to demand higher long-term rates of return, mortgage financing costs may remain high.

This pressure is also reflected in the building market data. As of the week of 7 August, the mortgage loan application had increased by 3.6 per cent, and the 30-year contract rate recorded by MBA had dropped to 6.77 per cent. However, sales in July decreased to 4.06 million units on an annual basis, a 1.7 per cent decline from the previous month.

In the short term, the continued fall in the interest rate on mortgages remains dependent on the decline in long-term United States debt yields. If the return on United States debt over a 10-year period continues to fall, it will be possible to obtain more room for a decline in the interest rate on housing.