Mortgage rates increased two basis points last week, according to the Freddie Mac Primary Mortgage Market Survey released on November 13th. Although this is the second small increase in as many weeks, rates have essentially remained flat this week, but purchase activity increased, which is encouraging.
Mortgage applications increased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 7th. “Purchase applications picked up almost 6 percent over the week to the strongest pace since September, despite mortgage rates increasing slightly,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications for conventional, FHA, and VA loans increased, as potential homebuyers continue to shop around, particularly in markets where inventory has increased and sales price growth has slowed. Based on the unadjusted purchase index for the week, this was the strongest start to November since 2022.” Added Kan, “Higher mortgage rates did quell some refinance activity, as conventional and VA refinance applications declined over the week, and the average loan size for refinances dropped to its lowest level in over a month.”
U.S. consumer sentiment slumped to near a 3-1/2-year low in early November as households across the political spectrum worried about the economic fallout from the longest government shutdown in history, which has caused disruptions ranging from food benefit payments to grounded flights. The University of Michigan’s Surveys of Consumers confirmed what economists describe as a K-shaped economy, where the higher-income households are doing well and lower-income consumers are struggling. “Shutdowns generally have only moderate economic impacts, given their typically brief nature and the economy bouncing back when the government reopens,” said Daniel Hornung, a policy fellow at the Stanford Institute for Economic Policy Research. “But this is a warning sign that this kind of prolonged shutdown could lead to more meaningful economic weakness.”
The NFIB Small Business Optimism Index declined 0.6 points in October to 98.2 but remained above its 52-year average of 98. The Uncertainty Index fell 12 points from September to 88, the lowest reading of this year. As reported in NFIB’s monthly jobs report, a seasonally adjusted 32% of all small business owners reported job openings they could not fill in October, unchanged for the second consecutive month. Before August, the last time unfilled job openings hit 32% was in December 2020. Of the 56% of owners hiring or trying to hire in October, 88% reported few or no qualified applicants for the positions they were trying to fill. Also, the frequency of reports of positive profit trends fell 9 points from September to a net negative 25% seasonally adjusted. This component contributed the greatest to the decline in the Optimism Index. Among owners reporting lower profits, 33% blamed weaker sales, 16% cited the rise in the cost of materials, 9% cited price change for their product(s) or service(s), and 9% cited labor costs.
