US mortgage rates have declined to their lowest level since mid-October, prompting a surge in home financing activities during a week that included the Thanksgiving holiday. According to the Mortgage Bankers Association (MBA), the 30-year mortgage rate dropped by 17 basis points to 6.69% in the week ending November 29, marking the largest weekly decrease since August.
This significant reduction in mortgage rates has spurred a notable increase in home purchase applications. The MBA’s index of home purchase applications rose by a seasonally adjusted 5.6%, reaching its highest level since the beginning of the year. Additionally, there was an impressive 18% jump in applications over the past two weeks, indicating strong buyer interest fueled by the more favorable financing conditions.
Mortgage rates are closely tied to Treasury yields, which have been on a downward trend in recent weeks. This decline suggests that the Federal Reserve may consider further reducing its benchmark rate. There is a slightly improved probability that the Fed will implement a third consecutive rate cut during its December 17-18 meeting. However, some policymakers remain cautious and have not ruled out maintaining current rates, keeping their options open based on evolving economic indicators.
On the other hand, the MBA’s refinancing index has fallen for the ninth week out of the last ten, reaching its lowest point since May. This decline reflects a reduced appetite for refinancing existing mortgages, likely influenced by the current rate environment and economic uncertainties.
The MBA survey, conducted weekly since 1990, gathers responses from mortgage bankers, commercial banks, and thrifts, covering more than 75% of all retail residential mortgage applications in the United States. The latest data highlights a dynamic mortgage market where lower rates are driving increased home purchase activity, even as refinancing demand wanes.
As mortgage rates continue to respond to Treasury yields and potential Federal Reserve actions, the housing market remains active. Homebuyers are taking advantage of the reduced rates to secure financing, while the overall economic outlook suggests continued interest in the real estate sector. This trend underscores the resilience of the housing market amid fluctuating economic conditions and evolving monetary policies.
