GETTY IMAGES NORTH AMERICA / JOE RAEDLE
Residential mortgage rates fell last week by the most since July 2022 as markets reacted to the possibility that the Federal Reserve may have ended its tightening cycle.
The average 30-year rate dropped 25 basis points to 7.61% in the week ended Nov. 3, the Mortgage Bankers Association said in its weekly survey. In October, the rate was close to 8%, the highest level in two decades.
“Last week’s decrease in rates was driven by the U.S. Treasury’s issuance update, the Fed striking a dovish tone in the November FOMC statement, and data indicating a slower job market,” MBA’s Vice President and Deputy Chief Economist Joel Kan said in a statement.
“Applications for both purchase and refinance loans were up over the week but remained at low levels. The purchase index is still more than 20 percent behind last year’s pace, as many homebuyers remain on the sidelines until more for-sale inventory becomes available.”
The MBA survey also showed that borrowers quickly reacted to the drop in rates. Total mortgage applications rose 2.5% last week.
The Fed maintained the U.S. key interest rate unchanged in the range of 5.25% to 5.5% last week. Investors have interpreted the Fed’s statement and comments by Chair Jerome Powell as signals that the cycle of increases may have come to an end.
Also last week, the Treasury Department said debt issuance will be lower than expected.
The two events led to a higher demand for Treasury notes, reducing the 10-year yield to a two-week low.
