Mortgage rates retreated from 23-year highs this week. Prospective home buyers have the Federal Reserve, the U.S. Treasury, and the jobs report to thank.
Freddie Mac’s
closely watched weekly measure of mortgage rates fell for the first time in eight weeks, the government-sponsored enterprise said Thursday. The average 30-year fixed mortgage rate was 7.76%, down slightly from last week’s multidecade high of 7.79%. The reading snaps a seven-week streak of gains.
“The 30-year fixed-rate mortgage paused its multiweek climb but continues to hover under 8%,” Sam Khater, Freddie Mac’s chief economist, said in a statement. The possibility of another Federal Reserve rate hike before the end of the year, along with global political uncertainty, could “have an impact on the overall economic landscape and may continue to stall improvements in the housing market,” he said.
Declines in a Treasury yield benchmark for mortgage rates is likely behind the relief. The 10-year Treasury yield, with which mortgage rates often move, has slumped for three straight days, with Thursday morning’s yield, at 4.661%, the lowest since Oct. 13, according to Dow Jones Market Data.
Since it’s a weekly average, Freddie Mac’s survey paints a smoothed picture of mortgage rates every week—but daily movements can be much more dramatic. Mortgage News Daily, whose survey of 30-year fixed mortgage rates is released every weekday, pegged the average rate at 7.51% on Thursday around noon—its second big slide in a row. The rate, which has fallen almost 0.40 percentage point since Tuesday, is well below the 8% it notched last month as Treasury yields rallied.
Freddie’s weekly survey collection period, which runs from Thursday morning through the following Wednesday night, means mortgage rate movements on Thursdays are wrapped into the following week’s average. The 10-year Treasury yield was down 0.129 percentage point on Thursday morning—suggesting further declines could be on the horizon, if the drop holds.
That’s a big “if”. The yield, with which mortgage rates often move, fell this week following a government jobs report that came in lower than expected, the Fed’s decision to pause rate increases, and the Treasury’s decision to hold fewer 10-year Treasury auctions than previously expected. Treasury yields and prices move in opposite directions.
Despite the Treasury’s announcement, “longer-term debt issuance will continue to climb, which keeps upward pressure on mortgage rates,” Realtor.com economic research analyst Hannah Jones said in a Thursday statement. (Barron’s parent company,
News Corp,
also owns Move, which runs Realtor.com.)
The slide is some welcome news for home buyers waiting for lower rates. Mortgage rates are over one percentage point higher than they were at the end of 2022, adding just under $300 to the monthly cost of purchasing a $400,000 home.
Should Tuesday’s lower Treasury yields hold, rates could remain lower—but it would take a lot more than the recent decline to bring rates back below 7%, data suggest. In early August, the last time Freddie Mac’s weekly average was below 7%, the average 3 p.m. Treasury yield was just over 4%, according to Dow Jones Market Data. That suggests, all else equal, yields would need to be over half a percentage point lower than they were Thursday morning for mortgage rates under 7% to be in the picture.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
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