Mortgage rates decreased another eight basis points according to the Freddie Mac Primary Mortgage Market Survey released on October 23rd. This is the third week in a row that mortgage rates have continued to trend down, now at their lowest level in over a year. At the start of 2025, the 30-year fixed-rate mortgage surpassed 7%, while today it hovers nearly a full percentage point lower. This dynamic has kept refinancings high, accounting for more than half of all mortgage activity for the sixth consecutive week.
Mortgage applications decreased 0.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 17th. “The lowest mortgage rates in a month spurred an increase in refinance activity, including another pickup in ARM applications. The 30-year fixed rate decreased, and all other loan types also decreased,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The refinance index increased 4 percent, driven by a 6 percent increase in conventional refinances and a 12 percent increase in FHA refinance applications, as borrowers remain attentive to these opportunities to lower their monthly mortgage payment. VA refinances bucked the trend and were down 12 percent. Purchase applications were down over the week but remained 20 percent higher than a year ago.
U.S. existing home sales increased to a seven-month high in September, but rising economic uncertainty and a stalled labor market could limit the boost from easing mortgage rates. Home sales rose 1.5% last month to a seasonally adjusted annual rate of 4.06 million units, the highest level since February, the National Association of Realtors said on Thursday. “As anticipated, falling mortgage rates are lifting home sales,” said Lawrence Yun, the NAR’s chief economist. “Improving housing affordability is also contributing to the increase in sales.” The average rate on the popular 30-year fixed-rate mortgage is near a one-year low after surging to above seven percent in January, data from mortgage finance agency Freddie Mac showed. Mortgage rates have eased after the Federal Reserve resumed cutting interest rates to shore up the labor market. The inventory of existing homes shot up last month by 14.0% to 1.550 million units from a year ago; however, it remains below the levels that prevailed before the COVID-19 pandemic.
The Federal Reserve was already facing one of its most difficult battles, steering a shifting economy through a weakening labor market and stubborn inflation. The government shutdown just made that fight even harder. To make determinations about its rate policy and other decisions to help the economy, the Fed relies heavily on official economic statistics that are collected and disseminated by the government. The shutdown has effectively cut off access to that data, from the unemployment rate to retail sales, since the beginning of October. With just one week to go before the Fed’s next decision on interest rates, officials are flying partially blind as they assess whether the labor market requires additional support, after data through August showed the weakest pace of hiring since 2010 and rising unemployment among young Americans and minorities. In the absence of government data, Fed officials have turned to other sources to gauge the labor market and consumer spending, two important drivers of the US economy and the focus of the Fed’s so-called dual mandate to balance economic growth with keeping prices in check.
