Mortgage Rates Level Off, Survey Says

Happy to report that last week, the Fed did not raise its interest rate, and long-term interest rates, such as mortgages, leveled off. According to the latest look at average mortgage rates, they’ve improved to their best levels in a month. But what happens next?

Well, it partly depends on what the Fed does next, which as of yet is unclear, although the Fed Chair’s press conference had a noticeable lack of tough talk on raising interest rates. We’ll have to wait and see what they decide to do next, but they have definitely not ruled out a rate hike by the end of the year.

Also, good news for rates is that it looks like the U.S. Treasury announced it will be borrowing less than expected to fund the government for the last quarter of the year. Thus, there will be less long-term bonds flooding the market for sale, which helps rates remain lower. 

The manufacturing sector has officially shown 12 consecutive months of contraction, obviously not great news for the economy, but may help mortgage rates to continue their sideways move and not continue increasing as rapidly. When the economy is cooling off, mortgage rates will cool off as well. 

As for what I’m watching this week…

There are very few high-impact economic reports set for release this week, so traders will likely be taking their cues from the outsized numbers of Treasury bonds hitting the open market for sale. 

We’ll also see Jerome Powell speaking publicly a couple of times, and I’m sure traders will be tuned in to see his take on the health of the economy and what the Fed is thinking about their next moves, and whether they’ll be raising interest rates or not. 

Consumer sentiment is the first indicator for consumer behavior for November. We know that consumer spending is what drives two-thirds of our economy. In October, consumer sentiment fell more than 4 points to 63.8 and is expected to slip slightly further to 63.5 for November.

As we know, the holiday shopping season is upon us, and consumer spending and retail sales become important reports that we follow as we look into the health of our nation’s economy and how it will affect mortgage rates in the coming months. 

Finally, a report from Realtor.com revealed some interesting and unexpected findings that the market may be shifting as inventory is growing and prices are coming down. Inventory of homes for sale in October rose by 5.1 percent, an unusual trend this time of year. We’re also seeing the time homes spend on the market decreasing, showing some buyers moving quickly to lock in rates before they go any higher. 

As always, if you are considering a purchase or need some cash out, please reach out. I’m happy to explore your specific scenario and help you find the financing solution that achieves your goals.