The 30-year fixed-rate mortgage averaged 7.76% as of Nov. 2, according to Freddie Mac‘s Primary Mortgage Market Survey. That’s was down slightly from last week’s 7.79% and up from 6.95% the same week one year ago.
“The 30-year fixed-rate mortgage paused its multi-week climb but continues to hover under 8%,” Sam Khater, Freddie Mac’s chief economist said in a statement. “The Federal Reserve again decided not to raise interest rates but have not ruled out a hike before year-end. Coupled with geopolitical uncertainty, this ambiguity around monetary policy will likely have an impact on the overall economic landscape and may continue to stall improvements in the housing market.”
The dance of the 10-year Treasury yield and mortgage rates
While mortgage rates are strongly influenced by the Fed’s policy, they also react to fluctuations in the 10-year Treasury yields, which have been historically high lately. On Wednesday, the U.S. Treasury Department announced that it would slow the pace of its longer-debt issuance, although the issuance will still continue to climb. According to Hannah Jones, economic research analyst at Realtor.com, this will keep upward pressure on mortgage rates.
“In general, an increase in a specific bond supply leads to a pick-up in the bond’s yields as more incentive is required to induce more investors to buy up the additional supply.,” she said in a statement. “So, the increase in debt issuance keeps upward pressure on longer-term bond yields and therefore mortgage rates, despite the increase being smaller-than-expected.”
As a result, mortgage rates should continue to hover around 8% in November, according to Bright MLS Chief Economist Lisa Sturtevant. They might tick down slightly by the end of the year.
“No one should expect a dramatic drop in rates next year. It is a new era where the average rate on a 30-year fixed rate mortgage will remain around 7% through early next year before declining to 6% by the end of 2024,” she added.
HousingWire Lead Analyst Logan Mohtashami discusses this week’s Fed meeting and what to expect on mortgage rates on this episode of HousingWire Daily podcast.