Falling mortgage rates help spring home buying activity

mortgage interest rate Slightly lower this weekThat was in line with the benchmark 10-year note as markets continued to digest comments from Fed members.

As of Thursday morning, the average interest rate on a 30-year fixed loan was 6.79%, down 8 basis points from 6.87% the previous week, according to the Freddie Mac Primary Mortgage Market Survey. same time last yearthe average is 6.32%.

Meanwhile, the 15-year FRM averaged 6.11%, down from last week’s average of 6.21% and up from the 5.56% average a year ago.

As of noon Thursday, the 10-year Treasury yield was 4.19%, down 8 basis points from the closing price of 4.27% seven days ago.

“Mortgage rates fell slightly this week, providing some potential homebuyers with more room in their budgets,” Sam Khater, Freddie Mac’s chief economist, said in a press release. Also saw encouraging existing home sales data, improving inventory.”

Data released by Redfin on Thursday Display increased by 15% The number of new listings increased in the four weeks to March 24. This resulted in a 6% increase in the number of homes for sale.

However, the same data and the Mortgage Bankers Association’s February Purchase Application Payment Index report released Thursday found that consumers are paying more each month for the homes they recently purchased.

“Regardless, interest rates remain near 7% as markets focus on signs of cooling inflation, with hopes that rates will fall further,” Khater said.

But it’s not just the Fed’s comments about its short-term interest rate plans that are affecting the mortgage market, but also the quantitative tightening program it has launched. Its investment portfolio, including mortgage-backed securities, runoff” said George Calhoun, director of the Qualitative Finance Program and director of the Hanlon Center for Financial Systems. He also serves as managing director of corporate relations for the Center for Research and Financial Technology at Stevens Institute of Technology.

Raising interest rates and QT are pursuing different goals for the Fed. “But they all affect the market and they amplify each other, and you can quantify the amplification as 1 to 1.5 percentage points. [for] Relative to Treasury rates and markets, they’re 30 years above traditional levels,” Calhoun said in an interview.

Calhoun believes the QT effect is the main reason for the unusually wide spread.

Calhoun continued: “If my theory is correct, then there is no narrowing in the short term. I know I’m not sure what the triggering effect of a narrowing will be,” especially since the Fed still holds about 2.4 trillion USD funds. According to the St. Louis Federal Reserve, MBS appears on its balance sheet.

As of noon Thursday, Zillow’s rate tracker was at 6.41%, down 14 basis points from the previous week’s average.

Orphe Divounguy, senior macroeconomist at Zillow Home Loans, said in a statement released late Wednesday that the rate drop was due to a lack of new economic data and mixed messages from Fed officials.

“Fed officials are likely to be increasingly divided, with some predicting three rate cuts this year and others predicting fewer cuts,” Dewanji said. “Those predicting further rate cuts are more confident.” , believing that inflation will be more firmly controlled.”

But Divounguy warned that there will be greater volatility in mortgage rates in the future as both the Fed and bond investors seek more volatility in mortgage rates. Hard evidence of low inflationwhose movement is predictable and stable.

Divounguy said the personal consumption expenditures price index is scheduled to be released on Friday, the next event driving mortgage rate repricing activity.

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