Emerging from the Thanksgiving holiday, mortgage rates decreased another four basis points last week according to the Freddie Mac Primary Mortgage Market Survey released on December 4th. With rates trending generally lower in the second half of this year, mortgage rates are half a percent lower compared to this time last year, creating a more favorable environment for homebuyers and homeowners.
Mortgage applications decreased 1.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 28th. “Mortgage rates moved lower in line with Treasury yields, which declined on data showing a weaker labor market and declining consumer confidence. The 30-year fixed mortgage rate declined after steadily increasing over the past month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “After adjusting for the impact of the Thanksgiving holiday, refinance activity decreased across both conventional and government loans, as borrowers held out for lower rates. Purchase applications were up slightly, but we continue to see mixed results each week as the broader economic outlook remains cloudy, even as cooling home-price growth and increasing for-sale inventory bring some buyers back into the market.”
U.S. applications for unemployment benefits fell to their lowest level in more than three years during Thanksgiving week, potentially complicating the Federal Reserve’s upcoming decision on interest rates. The number of Americans applying for jobless benefits for the week ending November 29th fell to 191,000 from the previous week’s 218,000, the Labor Department reported Thursday. That’s the lowest level since September 24, 2022, when claims came in at 189,000. Analysts surveyed by the data provider FactSet had forecast initial claims of 221,000. Kathy Bostjancic, chief economist at Nationwide, said that unemployment benefit filings are often distorted by the Thanksgiving holiday, which can cause some people who may have lost jobs to delay filing claims. Still, the low claims figure also suggests that overall layoffs remain muted, despite the high-profile announcements. Hiring is also sluggish, which makes finding a job for those out of work challenging.
The Federal Open Market Committee will meet next week to decide whether to continue cutting short-term interest rates, following a 0.25 percentage point reduction in October, or hold the federal funds rate at current levels. The outcome of the meeting is less certain than recent Federal Open Market Committee decisions because of limited economic data, a byproduct of the federal government’s shutdown. The Bureau of Labor Statistics said it will not release October inflation and employment figures because they were not collected during the shutdown and November data will be released after the meeting. The lack of data so close to a Federal Reserve meeting is concerning. It leaves policymakers without the most current figures on which to base their decisions. As a result, most members have said the shortage of information will factor into the committee’s deliberations.
