30-year mortgage rates fall for sixth week in a row

The average rate for the 30-year mortgage sank for a sixth week in a row, falling another 4 basis points even as the benchmark 10-year Treasury yield rose by 20 basis points over the period.

But pricing on the 15-year fixed rate mortgage reflected the higher yield, up 15 basis points on a week-over-week basis, the Freddie Mac Primary Mortgage Market Survey found.

The 30-year FRM averaged 6.27% for the week of Dec. 22, compared with 6.31% in the prior period. But that was still more than double the rate of one year ago, when it was 3.05%.

"Rates have declined significantly over the past six weeks, which is helpful for potential homebuyers, but new data indicates homeowners are hesitant to list their homes," said Sam Khater, Freddie Mac chief economist, in a press release. "Many of those homeowners are carefully weighing their options as more than two-thirds of current homeowners have a fixed mortgage rate of below 4%."

The 10-year Treasury yield, which is used to help price mortgages, opened Thursday morning at 3.65%. On Dec. 15, it closed at 3.45%.

But spreads between the 10-year and the 30-year FRM are still rather wide, at 262 basis points based on the Thursday morning data, which could account for why the mortgage rate fell. The normal spread is considered to be around 150 basis points.

Zillow's rate tracker for the 30-year FRM, which is based on offers made to consumers through its platform, increased 14 basis points week-over-week to 6.08%. Freddie Mac recently changed its methodology, now using data from applications submitted to its automated underwriting system.

Because it was a quieter week in terms of actionable data releases, investors focused on the broader economic landscape, said Matthew Speakman, senior economist at Zillow Home Loans, in a statement released Wednesday night.

"Investors increasingly appear to be gauging the likelihood of a recession coming in the next year, and recent weakness in retail sales figures stoked some of these concerns," Speakman said. "Treasury yields, and the mortgage rates that they tend to influence, were also pushed upward by a surprise monetary policy decision by the Bank of Japan, although it's unclear how much of a lasting influence this will have."

While volatility is not uncommon at year-end, it is unlikely a more substantive movement in mortgage rates won't occur until early January, when the next inflation data is released, Speakman said.