In a twist that caught many by surprise, mortgage rates are on a downward spiral, with the 30-year mortgage rate dropping a whopping 18 basis points to 7.40%, as reported by Mortgage News Daily. The driving force behind this unexpected plunge? A robust rally in the bond market, sparked by an inflation report that turned out to be milder than analysts anticipated.
This descent in mortgage rates isn’t a one-off; it’s part of an ongoing trend. The Federal Reserve’s decision to keep rates steady, coupled with a less-than-stellar monthly employment report, suggests a potential end to the era of interest rate hikes. This, in turn, is contributing to the welcome drop in mortgage rates.
Just a few weeks back, on October 19, the 30-year fixed mortgage rate soared to over 8%, marking its highest level in more than two decades. Fast forward to the first week of November, and it took a 25 basis points nosedive, settling at 7.38%. After a slight rebound last week, rates kicked off this week at 7.58%.
Matthew Graham, the Chief Operating Officer at Mortgage News Daily, is applauding the bond market’s reaction to today’s inflation data. He points out, “Mortgage lenders have done a great job of keeping pace with market movement considering mortgage rates are often accused of taking the elevator up and the stairs down.”
Despite recent rate fluctuations staying within a 1% range, the contrast to two years ago, when rates lounged around record lows of 3%, is making today’s homebuyers hyper-aware of every rate shift. Affordability concerns are on the rise, resulting in a noticeable dip in home sales over the past few months.
Lawrence Yun, Chief Economist for the National Association of Realtors, believes the days of interest rate hikes are behind us. He suggests that the Fed might even consider cutting rates. Yun envisions mortgage rates inching towards 7% in the next few months and possibly slipping into the 6% range by spring 2024.