Freddie Mac released the survey a day earlier than usual because of the Thanksgiving holiday. The federally chartered mortgage investor aggregates rates from around 80 lenders across the country to come up with weekly national averages. The survey is based on home purchase mortgages. Rates for refinances may be different. Freddie Mac uses rates for high-quality borrowers with strong credit scores and large down payments. Because of the criteria, these rates are not available to every borrower.
The 15-year fixed-rate average rose to 2.42 percent with an average 0.7 point. It was 2.39 percent a week ago and 2.28 percent a year ago. The five-year adjustable rate average slipped to 2.47 percent with an average 0.3 point. It was 2.49 percent a week ago and 3.16 percent a year ago.
“Despite the noise around the economy, inflation, and monetary policy, mortgage rate volatility has been low,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “For most of 2021, mortgage rates have stayed within half a percentage point, which is a smaller range than in past years.”
The yield on the 10-year Treasury climbed to its highest level in more than a month this week, closing at 1.67 percent on Tuesday. When investors buy 10-year Treasurys, they are essentially loaning the government money for 10 years. Their payment is the yield. Yields rise because they want to be paid more for their risk. Mortgage rates tend to follow a similar path as long-term bonds, though that has been less the case lately.
“There are mixed policy updates for investors to digest,” said Danielle Hale, chief economist at Realtor.com. “President Biden renominated [Federal Reserve] Chair [Jerome H.] Powell to another four-year term, while the Build Back Better Act, a social policy bill supported by the President, passed the House and heads to the Senate. While rates on 10-year Treasuries started November on a weaker note, they’ve increased in recent weeks as concern about rising inflation has grown, and mortgage rates have followed suit. Powell’s reappointment, therefore, will likely have a mixed impact, reassuring some investors who are confident in the Fed’s current approach while bracing others who would prefer a more hawkish stance toward recent price gains.”
Holden Lewis, home and mortgage specialist at NerdWallet, expects rates to remain rangebound for some time.
“In the last six weeks, mortgage rates have gone up, down, up, down, up and down," he said. "The upshot is that rates are roughly where they were in mid-October. It’s a sign that the markets have confidence that the economy will continue to grow, and the Federal Reserve is right that inflation will diminish.”
Meanwhile, mortgage applications moved higher last week. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — increased 1.8 percent from a week earlier. The purchase index grew 5 percent, and the refinance index ticked up 0.4 percent. The refinance share of mortgage activity accounted for 63.1 percent of applications.
“Despite the increase in rates, refinance applications rose slightly, driven by a 2 percent gain in conventional refinances,” said Joel Kan, an MBA economist. “Borrowers continue to lock in mortgages in anticipation of higher rates in the future. Refinance applications were still more than 30 percent below a year ago. … Purchase activity increased for the third straight week, as housing demand remains robust, even as the housing market approaches the typically slower holiday season. Both conventional and government loan applications increased, and the average loan size for a purchase loan was at $407,200, continuing its ongoing 2021 run of being mostly above $400,000.”