US Mortgage Rates Fall for a Second Week but Remain Elevated at 6.58%

In the week ending November 24, mortgage rates fell for a second consecutive week. 30-year fixed mortgage rates slipped by 0.03% to 6.58%, following a 47-basis point tumble in the previous week.

Following the latest decline, rates are up 159 basis points from the August 3 most recent low of 4.99%. 30-year fixed rates were up 348 basis points year-over-year.

Economic Data from the Week

In the early part of the week, there were no US economic indicators to influence US Treasury yields and US mortgage rates. Freddie Mac’s weekly survey was for the week ending Tuesday, November 22, because of the US Thanksgiving holidays.

Bets of a Fed pivot continued to support a pullback in mortgage rates ahead of a busy Wednesday session.

However, it was a busier mid-week session on the economic calendar, with US private sector PMIs, weekly jobless claims, and consumer sentiment figures in focus. The stats supported the market bets of a December Fed pivot. Significantly, the Services PMI fell from 47.8 to 46.1, with the weekly jobless claims up from 223k to 240k.

Despite Fed monetary policy moves, labor market conditions remain robust, supporting consumer confidence and spending. The November Michigan State Consumer Sentiment numbers reflected the mood, rising from 54.7 to 56.8.

On Wednesday, the FOMC meeting minutes also delivered a pullback in US Treasury yields, with Committee members talking about slowing the pace of rate hikes.

The weak economic Indicators and the FOMC meeting minute should support another pullback in mortgage rates for the week ending November 30.

Freddie Mac Rates

The weekly average rates for new mortgages, as of November 23, 2022, were quoted by Freddie Mac to be:

• 30-year fixed rates slipped by three basis points to 6.58%. This time last year, rates stood at 3.10%.
• 15-year fixed rates fell by eight basis points to 5.90%. Rates were up by 348 basis points from 2.42% a year ago.

According to Freddie Mac,

• Mortgage rates continued to fall, though increased mortgage rate volatility has tested buyer demand.
• After rising above 7%, rates have tumbled by half a percentage point in a few weeks.
• Building permit figures reflected uncertainty over demand, with permits sliding by 3.3% in November.

Mortgage Bankers’ Association Rates

For the week ending November 18, 2022, the rates were:

• Average interest rates for 30-year fixed with conforming loan balances decreased from 6.90% to 6.67%. Points rose from 0.56 to 0.68 (incl. origination fee) for 80% LTV loans.
• Average 30-year fixed mortgage rates backed by FHA fell from 6.93% to 6.66%. Points increased from 0.99 to 1.01 (incl. origination fee) for 80% LTV loans.
• Average 30-year rates for jumbo loan balances decreased from 6.51% to 6.30%. Points rose from 0.64 to 0.74 (incl. origination fee) for 80% LTV loans.

Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, a measure of mortgage loan application volume, increased 2.2% in the week ending November 18. The Index increased by 2.7% in the week prior.

The Refinance Index increased by 2% and was 86% lower than the same week one year ago. In the previous week, the Index declined by 2%.

The refinance share of mortgage activity increased from 27.6% to 28.4%. The refinance share fell from 28.1% to 27.6% in the previous week.

According to the MBA,

• 30-year fixed rates fell for a second consecutive week and are now down almost 50 basis points from the most recent peak of 7.16%.
• The downward trend in mortgage rates should support purchasing power.
• Both purchase and refinance applications rose last week, though refinance activity remains more than 80% below levels seen a year ago.

For the week ahead

It is a relatively quiet first half of the week. Consumer confidence figures will draw interest ahead of another busy Wednesday. On Wednesday, ADP nonfarm employment change, inflation, and JOLTs job openings will provide US Treasuries and mortgage rates direction.

From the week prior, the FOMC meeting minutes will set the tone, however. The latest minutes and last week’s stats have refueled bets of a Fed December pivot. This weekend, the probability of a 75-basis point December rate hike stood at 24.2%, unchanged from last weekend.

While the stats will influence, FOMC member chatter will also drive yields. FOMC members have delivered mixed signals since the last FOMC meeting, leaving some uncertainty for the markets to tackle.