As the 10-year Treasury yield sank following last week's Federal Open Market Committee Meeting and the release of the employment data, mortgage rates followed along, with the largest drop in almost a year, Freddie Mac said.
Its Primary Mortgage Market Survey put the average for the 30-year fixed rate loan at 7.5%, a 26 basis point decline from 7.76% for the week of Nov. 2.
One year ago, the 30-year fixed-rate averaged 7.08%.
The 10-year Treasury peaked at 4.9% on Oct. 31, the first day of the FOMC meeting that ended with the decision not to raise short-term rates. On Nov. 8, the yield hit its low since then at 4.5%, a drop of 40 basis points.
In that same time frame, Optimal Blue's data showed the 30-year FRM fell 33 basis points, from 7.777% to 7.444%.
"Incoming data show that household debt continues to rise, primarily due to mortgage, credit card and student loan balances," Sam Khater, Freddie Mac chief economist, said in a press release. "Many consumers are feeling strained by the high cost of living, so unless mortgage rates decrease significantly, the housing market will remain stagnant."
Yesterday, the Mortgage Bankers Association reported a 25-basis point decline in the conforming 30-year FRM that contributed to the first increase in application volume in four weeks.
The 15-year FRM dropped 22 basis points for the week of Nov. 9, to 6.81% from 7.03%; for the same week last year, it was at 6.38%, Freddie Mac said.
Last Friday's "soft labor market data" was responsible for the large drop, said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a Wednesday evening statement.
"The near 50 basis-point uptick in the unemployment rate outpaced even the FOMC's own unemployment rate forecast, prompting concerns that recession risk could be increasing again," Divounguy said. "Wage growth also moderated further as the gap between labor demand and supply continues to close."
Zillow's rate tracker as of mid-morning Thursday put the 30-year fixed at 7.2%, up 1 basis point from Wednesday but still 17 basis points lower than the average for last week.
A policy reversal by the Fed is not likely, as excess savings held by consumers are higher than previously thought.
"This should support consumers and spending going into the holiday season," Divounguy said. "Loosening financial and credit conditions are also encouraging economic activity."
If the contents of next week's Consumer Price Index release causes investors to recalculate their inflation forecasts, the market may see more large swings in mortgage rates, Divounguy concluded.
