In the run-up to this week’s Federal Open Market Committee meeting, mortgage rates stayed essentially flat, as the market priced in the expected decision not to move.
The 30-year fixed rate mortgage, while down by one basis point from the previous week, is still close to the 7% level at 6.95%, the Freddie Mac Primary Mortgage Market Survey for Jan. 30 found. The majority of the data gathering period was before the Fed announcement.
But the rate is 32 basis points higher than it was a year ago at this time, when the 30-year FRM averaged 6.63%.
The 15-year FRM was 4 basis points lower versus the week of Jan. 23, to 6.16% from 6.12%. For the same week in 2023, this product averaged 5.94%.
The 10-year Treasury yield, while moving higher initially following the Federal Open Market Committee’s decision not to raise short term rates, was 4.53% at 11 a.m. on Thursday morning.
“The 30-year fixed-rate has hovered between 6% and 7% for most of the last two and a half years,” said Sam Khater, Freddie Mac chief economist, in a press release. “That trend continued this week.”
The Mortgage Bankers Association’s Weekly Applications Survey released on Wednesday, had the 30-year FRM unchanged week-to-week at 7.02%.
“Driven by these higher rates and a persistent supply shortage, affordability hurdles still exist for many homebuyers and a significant number of them remain on the sidelines,” Khater said.
As of 11 a.m. Wednesday, the 10-year Treasury yield was 4.53%, down 3 basis points on the day. In the immediate aftermath of the FOMC announcement, the yield did move higher, topping out on Wednesday at 4.59%. It closed on Jan. 23 at 4.64%.
Optimal Blue’s product and pricing engine data for Wednesday put the conforming 30-year FRM at 6.88%, essentially flat with seven days prior, when the average was 6.901%
Other trackers showed a larger weekly drop.
At that same time on Thursday, Lender Price data for the 30-year fixed rate mortgage posted on the National Mortgage News website, showed that product just shy of 7%, at 6.939%. At the same time one week ago, it was 7.106%.
Zillow’s rate tracker had the 30-year FRM at 6.59%, down 2 basis points from Wednesday and 11 basis points from the previous week average of 6.7%,
In the immediate aftermath of the FOMC announcement, mortgage rates barely changed, said Kara Ng, senior economist at Zillow Home Loans, in a Wednesday evening statement. She is among the industry economists who now expect mortgage rates to bounce up and down in the future, especially given the wide range of economic outcomes and lack of clarity for investors.
“If government policies raise inflation and take future rate cuts completely off the table, mortgage rates could rise,” Ng said. “Alternatively, if fiscal deficits become leaner than expected, or if businesses reduce labor in response to rising input costs, mortgage rates can fall.”
Samir Dedhia, CEO of One Real Mortgage, was more optimistic, saying the fact rates did not rise this week is a strong sign that the increases might be over, although adding that industry participants are in wait-and-watch mode for the first quarter.
“Despite the Federal Reserve’s decision to pause rate hikes yesterday, the mortgage-backed securities market remains stable, showing optimism for potential rate cuts in 2025 — sooner, rather than later,” Dedhia said in a comment on the Freddie Mac survey. “With minimal market movement following the Fed’s announcement, investors appear to be pricing in a more predictable rate environment.”
Following the release of gross domestic product and Personal Consumption Expenditures Price Index data this morning, those numbers are in line with the FOMC’s view that the economy and job market both remain strong, Joel Kan, the MBA’s deputy chief economist, said in a statement.
“However, inflation is still above the Fed’s 2% target, reinforcing the need to hold the fed funds rate at its current level for a little longer to keep inflationary pressures in check,” Kan continued. “We expect one additional rate cut later this year, with longer-term rates and mortgage rates expected to remain in a range close to current levels at least until the end of 2025.”
