Have mortgage rates found a direction after the Fed meeting?

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Mortgage rates continue to dip

The national average for a 30-year, fixed-rate mortgage fell again on Thursday. The national average ended trading down 0.12% to 6.63%*. Bonds continued to rally after bank stocks sold off early on Thursday. Mortgage rates were spurred on by the rally and ended up lower for the day.

Next week will see a lot more Fedspeak and a few data points to give markets guidance.

Which factors impact mortgage rates?

A recent article from Keeping Current Matters detailed the two economic factors that may have a large impact on mortgage rates.

The first factor that may have an affect on the rates you see is inflation and the Federal Reserve. The Fed doesn’t directly impact mortgage rates. Interest rates are set by the Fed, and those are adjusted to maintain price stability and stable employment.

The second factor highlighted in the article is the 10-year treasury yield. We’ve often mentioned how the bond market impacts mortgage rates, and the 10-year treasury yield is one of the more important areas to look. Historically speaking, the spread between the 10-year treasury yield and mortgage rates is fairly consistent, and the two tend to follow each other.

Is the housing market finally thawing?

According to recent analysis from Realtor.com, the housing market is out of the deep freeze it was in for most of 2023. Mark Zandi, the chief economist at Moody’s Analytics, stated, “The worst is over for the housing market. (But) it will take a number of years for the housing market to fully normalize.”

Mortgage rates have stated to cool off, and mortgage applications have started to spike heading into the spring. Applications were up 34% nationally during the week of January 19th compared to four weeks ago.

From November to December, new home sales were up 8% and pending home sales were up 8.3%.

When asked about the strong sales numbers, Realtor.com chief economist Danielle Hale said, “We’re at a turning point. This could be a sign that the market is opening up, and we could see more people moving and [buying and selling] this spring.”

The housing market may be starting to open up, but only time will tell how strong the spring market will be.

* National average rates accurate as of 2/1/24 from MortgageNewsDaily.com and are not advertised rates from Guaranteed Rate.

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