Updated

Updated · abcnews.com · Oct 29

U.S. 30-Year Mortgage Rate Falls to 7.24% as 3.7% Inflation Keeps Borrowing Costs High

Updated

Updated · abcnews.com · Oct 29

U.S. 30-Year Mortgage Rate Falls to 7.24% as 3.7% Inflation Keeps Borrowing Costs High

Q: If Treasury yields just hit their lowest since late September, is this the start of lasting mortgage relief or only a brief market-driven dip?

It looks more like a short-term market-driven dip than the start of durable mortgage relief. The immediate drop in Treasury yields and mortgage rates was driven by a classic “risk-off” move: investors bought bonds as stocks, especially tech shares, weakened after disappointing guidance from Intel and Amazon. That can lower mortgage rates for a day or two, but it does not by itself change the broader rate outlook. For a sustained decline in mortgage rates, bond investors would need stronger evidence that inflation is cooling and growth is slowing enough to keep the Federal Reserve from staying restrictive. Recent data point the other way. GDP growth has remained firm, PCE inflation has been elevated, and jobless claims have stayed low, all of which support a cautious Fed and can keep long-term yields from falling much further. Mortgage rates also do not follow the 10-year Treasury one-for-one. They depend on mortgage-backed securities pricing, lender margins, servicing costs, and investor appetite for mortgage pools. In volatile markets, lenders can reprice intraday, so a favorable morning quote is not always the final one by afternoon. That means borrowers are getting some real, if modest, relief now. But unless lower Treasury yields are reinforced by cooler inflation, softer labor data, and continued strength in mortgage-backed securities, this move is more likely to be a temporary window than the start of a lasting downward trend in mortgage rates.

3 articles · Updated · abcnews.com · Oct 29

Freddie Mac put the average 30-year fixed mortgage at 7.24%, down for a second straight week and off 7.4% from two weeks earlier.
Inflation is limiting that relief: consumer prices rose 3.7% in September, and the Iran war's oil shock has kept bond yields and mortgage costs well above pre-war levels.
Markets now see about an 85% chance of a quarter-point Fed hike in December, a prospect that could push mortgage rates back up even after this recent dip.
Rates remain more than 1 percentage point above late-February levels, squeezing affordability, discouraging some buyers and deepening the housing market's lock-in effect.