Mortgage rates edged down for the second consecutive week, a move buyers hope will continue, but economists say may not have much of an impact on the market.
The latest Freddie Mac Primary Mortgage Market Survey® released Thursday shows the average 30-year fixed-rate mortgage rate at 7.24%, down eight basis points from 7.32% last week when it decreased for the first time in two months. The 30-year FRM is still up year-over-year from 6.17% last year. The 15-year FRM averaged 6.60, down from 6.68%, last week. A year ago at this time, the 15-year FRM averaged 5.41%.
At press time, the average rate inched up to 7.29% Thursday afternoon, according to Mortgage News Daily.
The decrease follows a retreat in the 10-year Treasury yield, which averaged about 5.02% in the past week compared to 5.13% the week prior. That decrease was spurred on by ongoing volatility in the stock market, leading investors to seek safety in government debt, said one economist.
“It could be argued that weak housing market data, namely softer home construction activity, record-low pending sales, and declining new home sales, are creating a feedback loop as well,” said Realtor.com Senior Economist Joel Berner in a statement. “A struggling housing market can be a sign of weaker economic growth to come, which lowers the returns investors demand on their bond purchases. In turn, this allows mortgage rates to fall and hopefully alleviate some of the negative effects being experienced by the housing market.”
At its meeting yesterday, the Federal Reserve’s Open Market Committee left the target interest rate unchanged, but two members dissented in favor of a 25 bps hike. Berner said prediction markets already favored a hike in December, but that likelihood grew higher after the release.
“Expectations of further Fed tightening are widespread, but the upcoming data releases on inflation and employment before December 9th will give stronger indication of whether upward pressure on mortgage rates is in store,” he said. “The Fed appears laser-focused on the price level, and another month of core inflation coming in above their target of 2% would justify those rate hike expectations.”
Berner concluded his comments by saying that while this week’s retreat in mortgage rates is “welcome news” to anyone involved with the housing market, it may not be enough to move the needle.
“It comes during a period in the year where home sales activity is usually more muted anyway,” Berner said. “The best time of year to buy a home has passed for most markets in the country, and the winter slowdown is upcoming, so the rate relief this week may not have much of an impact on the market. Both buyers and sellers are hoping that the downward trajectory of the last two weeks is a sign of things to come, and that the great housing market unlocking becomes a reality in 2027.”
Click here to read Freddie Mac’s full report.
