Mortgage rates continued to whipsaw, as a 13 basis point increase pushed the average back above 7%, Freddie Mac said. But some are speculating that a favorable inflation report issued Thursday morning could make the Federal Reserve pause on increasing short-term rates sooner than expected, likely driving mortgage rates lower.
Its Primary Mortgage Market Survey found the average for the 30-year fixed rate loan was 7.08 for the week ended Nov. 10, up from 6.95% for
"As the housing market adjusts to rapidly tightening monetary policy, mortgage rates again surpassed seven percent," said Sam Khater, Freddie Mac's chief economist, in a press release. "The housing market is the most interest-rate sensitive segment of the economy, and the impact rates have on homebuyers continues to evolve."
Zillow's rate tracker had the 30-year FRM increasing only 5 basis points Thursday morning compared with the previous week to 6.89%.
"Mortgage rates were up slightly this week, holding firm near 20-year highs after an eventful seven days filled with key monetary policy, economic and political updates," said Matthew Speakman, senior economist at Zillow Home Loans, in a statement issued Wednesday night. "After rising strongly in response to comments from the Federal Reserve indicating that more rate hikes and policy tightening were likely in the coming months, mortgage rates had a muted reaction to the October jobs figures, which showcased a resilient, but softening labor market."
Rates also had a mild reaction to Tuesday night's election results, where several races key to control of Congress remain too close to call, Speakman said. The inflation data release on Thursday morning was also likely to impact mortgage rate movements, he added.
In recent months, mortgage rates have increased in response to the Federal Open Market Committee's continued boosting of short-term rates.
But the Consumer Price Index increased by 7.7% year-over-year in October, less than expected and down from an 8.2% gain in September.
And the 10-year Treasury yield, a benchmark for the 30-year FRM, dropped in response on Thursday morning. Wednesday afternoon, the 10-year closed at 4.15%, opened on Thursday morning at 4.08% and zoomed down to 3.86% by 10 a.m. Eastern Time
Mortgage industry economists are expecting
"The signs are that a series of rapid interest rate rises may finally be taming rampant inflation," said Samuel Fuller, director of Financial Markets Online, a foreign exchange trader, in a statement. "Prices are cooling faster than expected in the U.S., which makes a 0.75% rate rise next month extremely unlikely."
Fuller had expected a 50 basis point increase next month, but an even smaller boost is more likely now that the Fed "has so much more breathing space.
"Core inflation remains a concern so don't expect an outright cut for some time," Fuller said.
On the other hand, Nigel Green, CEO of financial advisors deVere Group, said inflation is still too hot for the Fed to stop and expects that 50 basis point rise.
"That said, today's inflation data is likely to excite the markets because it means the Fed is now more likely to signal it will slow down its rate-hiking pace in months to come," Green said.
The other rates Freddie Mac tracks also increased from last week. The 15-year FRM averaged 6.38%, compared with 6.29% a week ago and 2.27% a year ago.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 6.06%, up from last week when it averaged 5.95% percent. For this same week in 2021, it averaged 2.53%.
Starting with next week's PMMS, Freddie Mac will be using a new methodology to compile its data.
Freddie Mac is switching from surveying lenders to using the data it obtains from the mortgage applications submitted each week. As part of the change, it will no longer report ARM rates as well as fees and points.
