Freddie Mac – Mortgage Rates Drop as Inflation Indicators Weaken

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Freddie Mac Mortgage Rates – November 232022

What happened to mortgage rates this week:

Freddie Mac’s fixed rate for a 30-year loan was little changed from last week’s sharp drop, slipping just another 3 basis points to put rates at 6.58%. This week’s drop took the 30-year fixed rate to its lowest point in the past two months for a second week in a row and is now half a percentage point lower than it was just a year ago. two weeks. The 10-year Treasury note, a longer-term benchmark rate, has also hovered in a lower range of 3.7% to 3.85% since October inflation data was released nearly a year ago. two weeks saw a sharp reset in interest rate expectations. Prior to the inflation data, the 10-year Treasury had topped 4.2%. However, the market may be a little quick to celebrate improving inflation. At November Fed meeting, Chairman Powell has stressed the need for continued rate hikes to keep inflation under control, and several Fed speakers since the release of the latest inflation data have indicated that further hikes are still needed. This could mean that mortgage rates could rise again and the risk will increase if inflation next month is on the rise.

Freddie's Chart 2022-11-23

What this means:

After generally higher mortgage rates throughout 2022, the recent shift in favor of buyers is welcome. This could save the buyer of a median-priced home listing more than $100 per month compared to what they would have paid when rates were above 7% just 2 weeks ago. However, with weekly changes in mortgage rates on average almost three times larger than in a typical year, many potential buyers have recoiled. A long-term housing shortage keeps house prices high, even though the number of homes on the market for sale has increased, and buyers and sellers may find it more difficult to align price expectations when the cost of financing fluctuates so much. A refrigeration rental marketwhere rental growth is returning to historic norms, may offer hesitant buyers a haven from which to regroup and perhaps reassess their plans in the new year.

George Ratiu
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