Mortgage rates declined for the fifth week in a row, with the outlook pointing to further likely pullbacks in the coming months, researchers say.
"Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates," said Freddie Mac Chief Economist Sam Khater in a press release.
The 30-year fixed rate average dropped to 7.22% for the weekly period ending Nov. 30, according to the latest data from Freddie Mac's Primary Mortgage Market Survey. The rate came in 7 basis points lower
The 15-year fixed rate also dropped for a fifth straight week, falling 11 basis points to 6.56% from 6.76%. At the same point in 2022, the 15-year average sat at 5.76%,
Corresponding 10-year Treasury yields over the past seven days similarly pulled back after opening at 4.41% the day after Thanksgiving. At close of trading on Wednesday this week, the 10-year yield had fallen to 4.27% but rose back up to 4.35% by midday Thursday.
Investor activity driving down mortgage rates over the past week can be chalked up "in large part
A possible outcome if the current economic path holds is a cut to the federal funds rate, which some analysts are expecting by mid 2024.
"New data arriving in the coming months will help to clarify just how much monetary policy may need to be recalibrated," Divounguy said in a statement issued on Wednesday.
"Long term interest rates depend on expected inflation and economic growth. So long as core inflation and economic activity continues to moderate, mortgage rates may finally start to level off."
While lenders and borrowers will welcome any interest rate relief,
"Although application activity remains below year-ago levels, applications have increased for four consecutive weeks. In addition to helping to improve affordability for homebuyers, a continued decline in mortgage rates could also convince some homeowners to sell, which would increase the low supply of existing homes on the market," said MBA President and CEO Bob Broeksmit.
Khater described the recent decline in rates as an "encouraging development."
"The modest uptick in demand over the last month signals that there will likely be more competition in a market that remains starved for inventory," he noted.
Other rate trackers mirrored Freddie Mac's findings with their averages lower week over week.
Optimal Blue's product and pricing engine reported the 30-year conforming average easing back closer to the 7% mark. At the end of Wednesday, the rate had fallen to 7.1%, down 13 basis points from 7.23% on Nov. 23.
Similarly, Zillow's national rate tracker found the 30-year fixed average at 6.77% on Thursday morning, falling from 6.97% a week earlier.
The next economic indicator that could potentially interrupt the downward movement of rates is the release of the November
"If next week's employment report shows higher-than-expected wage growth in November, then yields could surge back up," Divounguy said.