Mortgage rates decreased for the second week in a row, falling by another three basis points according to the Freddie Mac Primary Mortgage Market Survey released October 16th. Rates have held relatively steady over the past several weeks. More importantly, homeowners have noticed these consistently lower rates, driving an uptick in refinance activity. Combined with increased housing inventory and slower house price growth, these rates are also creating a more favorable environment for those looking to buy a home.
Mortgage applications decreased 1.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 10th. “Mortgage rate movements were mixed last week, with the 30-year fixed rate decreasing slightly. Mortgage applications were lower than the week before, as conventional and VA applications saw declines,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “FHA applications saw a stronger week, and FHA refinance applications in particular increased 12 percent as the FHA rate stayed more than 10 basis points lower than the conventional fixed rate. Purchase applications declined for the third consecutive week but remained 20 percent ahead of last year’s pace as improving inventory conditions in certain markets continue to maintain homebuyer interest.”
Consumer sentiment around the U.S. dipped in October, sinking to a five-month low as Americans fret over a stalling job market and stubbornly high inflation, new private economic data shows. The University of Michigan’s preliminary October sentiment index, released last Friday, shows consumer sentiment fell 0.1% monthly, from 55.1 points in September to 55. While the drop was nominal, it represents the third consecutive month the confidence measure has declined. Americans remain concerned about high prices, with expectations for inflation over the next year still hovering at elevated levels. Weakening job prospects also remain top of mind for Americans, Joanne Hsu, director of the Surveys of Consumers at U. of Michigan, said in a statement. “At this time, consumers do not expect meaningful improvement in these factors,” she said.
Federal Reserve Chair Jerome Powell on Tuesday emphasized that a sharp slowdown in hiring poses a growing risk to the U.S. economy, a sign that the central bank will likely cut its key interest rate twice more this year. Powell, who spoke before the National Association of Business Economics, said that despite the federal government shutdown cutting off official economic data, “the outlook for employment and inflation does not appear to have changed much since our September meeting,” when the Fed reduced its key rate for the first time this year. Powell reiterated a message he first delivered after the September meeting, when he signaled that the Fed is slightly more worried about the job market than its other congressional mandate, which is to keep prices stable. Tariffs have lifted the Fed’s preferred measure of inflation to 2.9%, he said, but outside the duties, there aren’t “broader inflationary pressures” that will keep prices high. “Downside risks to employment have shifted our assessment of the balance of risks,” he said.
