Mortgage Rates Reach Lowest Average in Over Than a Year
Mortgage rates in October fell to their lowest average in over a year. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.25% in October, 10 basis points (bps) lower than in September and 17 bps lower than a year ago.
The 15-year rate, meanwhile, decreased only 1 basis point to 5.49% — 11 bps lower than a year ago.
The 10-year Treasury yield — a key benchmark for long-term borrowing — averaged 4.09% in October, which was a 5-basis-point decrease from September. Markets priced in rate cuts from the Federal Open Market Committee (FOMC) at the beginning of the month resulting in relatively unchanged rates following the announcement of a 25-basis-point cut to the federal funds rate on Oct. 29.
Declining mortgage rates have had some effect on housing activity. According to the Mortgage Bankers Association, mortgages applications, refinancing applications and purchase applications have all increased. Existing home sales also rose to a seven-month high in September. Data for new home sales have been delayed due to the current government shutdown.
The housing industry, however, is up against a weakening job market and elevated inflation. The upcoming Supreme Court case on the legality of recent tariffs and lack of economic data also add to the uncertainty, making the vote at the forthcoming December FOMC meeting virtually unpredictable.
More details are available in this Eye on Housing post.