Last week’s drop in Treasury yields has translated into lower costs for home buyers. One measure of mortgage rates fell 0.25 percentage point last week, its greatest one-week drop since July 2022.
The average 30-year fixed mortgage rate last week dropped to 7.61% from 7.86% the week prior, according to the Mortgage Bankers Association’s weekly survey, released Wednesday morning.
Freddie Mac’s closely-watched mortgage rate survey, which covers a period of time from Thursday morning through Wednesday night, is expected Thursday at noon and will likely reflect a similar drop.
The decline followed a raft of cooler-than-expected economic data and successful Treasury auctions, Barron’s reported last week. Mortgage rates frequently mirror movements in the
10-year Treasury yield,
though the gap between the two this year has been wider than it normally is.
That decline excited investors in home builder stocks. Exchange-traded funds tracking the industry have rallied in recent days, first sent higher by the decline in Treasury yields, then D.R. Horton’s strong earnings and guidance. The
iShares U.S. Home Construction
ETF (ITB), which tracks home building companies and related shares, closed 1.24% higher on Tuesday, and was up 0.8% in morning trading.
Demand for mortgages ticked up a bit. The trade group’s seasonally-adjusted purchase index increased 3% from the week prior. The week-over-week increase was the largest since June—but that doesn’t mean buyers are flooding back. The index rose to a level but brought the index to a level just off the 28-year low it hit last week.
“Applications for both purchase and refinance loans were up over the week but remained at low levels,” Joel Kan, the trade group’s deputy chief economist, said in a statement. “The purchase index is still more than 20 percent behind last year’s pace, as many homebuyers remain on the sidelines until more for-sale inventory becomes available.”
Write to Shaina Mishkin at [email protected]
Read the full article here