Mortgage rates stabilized this week as the Federal Reserve decided to keep its rates unchanged Wednesday. However, mortgage rates still remain at a 23-year high.
The 30-year, fixed-rate mortgage averaged 7.76% as of Nov. 2, according to Freddie Mac‘s Primary Mortgage Market Survey. That’s down slightly from last week’s 7.79% and up from 6.95% the same week a year ago.
HousingWire’s Mortgage Rates Center showed Optimal Blue’s average 30-year fixed rate for conventional loans at 7.692% on Thursday, compared to 7.83% the previous week.
“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.
He added: “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, mortgage rates
While mortgage rates are strongly influenced by the Fed’s policy, they also react to fluctuations in the 10-year Treasury yield, which has been historically high as of late.
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.
Hannah Jones, economic research analyst at Realtor.com, said 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,” Jones 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 near 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 said.
HousingWire Lead Analyst Logan Mohtashami discusses this week’s Fed meeting and what to expect in mortgage rates on this episode of HousingWire Daily podcast.
