Mortgage rates

The 10-year Treasury yield, one of the mechanisms used to price 30-year fixed rate mortgages, is higher than where it was one week ago.

The 30-year fixed rate mortgage fell for the first time in six weeks as the Federal Open Market Committee meeting outcome is finally priced in.

Mortgage rates rose 7 basis points this week, Freddie Mac said, and more increases are likely following a weaker than expected gross domestic product report.

But views are split, at least in the near-term on whether rising mortgage rates are holding back the Spring home purchase season.

Mortgage rates rose this week as investors priced stronger than expected inflation and jobs affecting Fed moves into the 10-year Treasury.

In a study posted weeks after it raised concerns about "junk fees," the Consumer Financial Protection Bureau noted that the amount of borrowers paying discount points doubled from 2021 to 2023, with the increase larger among consumers with lower credit scores.

But the 30-year fixed rate mortgage is still near 7%, and that remains the overhang on the housing market, Freddie Mac said.

Instability in mortgage rate movements should continue in the weeks ahead, even with Fed Chairman Jerome Powell's comments on inflation.

The average 30-year fixed mortgage rate for conforming loans fell, according to Freddie Mac, even as the 10-year Treasury yield rose nearly 18 basis points from the start of this week.

But those rates are still relatively high, and that is a barrier to entry for potential homebuyers, Freddie Mac said.

The latest inflation news has created concern that the Federal Reserve's pivot on short-term rates could be delayed.

For the first time since mid-December, the Freddie Mac survey reports mortgage rates over 6.7%.

Even with the 9 basis point rise this week, they have remained at the same level since mid-December, and that should bring people into the market, Freddie Mac said.

Its January forecast reverses the call first made in April 2022 that the U.S. economy would slip into an extended downturn.

The move is somewhat counterintuitive relative to other market signals but Fannie Mae generally forecasts a net positive shift in lending conditions this year.

For the past week, the benchmark 10-year Treasury closed above 4%, as the markets priced in an increase in the consumer price index.

But this week the 30-year fixed rate mortgage average increased for the first time in two months.

Rates that have been below 7% for two consecutive weeks have given originators a gift at what's typically a slow time of year, Freddie Mac said.

The Fed's announcement is responsible for a 19 basis point drop in the 10-year yield over a two-day period, pushing the 30-year fixed under 7% for the first time since August, Freddie Mac said.

Recent economic data pushed investors toward Treasurys over the past week, driving 10-year yields to as low as 4.1%.