Mortgage Rates Increase Again, But Are One Percent Lower Than A Year Ago
Mortgage rates increased another 12 basis points last week, according to the Freddie Mac Primary Mortgage Market Survey released October 17th. They have now increased for three consecutive weeks based on stronger than expected economic news. These higher rates reflect the strength in the economy that is supportive of the housing market. But notably, as compared to a year ago, rates are more than one percentage point lower and potential homebuyers can stand to benefit.
Mortgage applications decreased 17.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending October 11, 2024. “Mortgage rates moved higher for the third consecutive week, with the 30-year fixed rate increasing to its highest level since August,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The recent uptick in rates has put a damper on applications. Demand is holding up to an extent for prospective first-time buyers. FHA purchase applications were little changed despite the increase in rates, as some first-time homebuyers remain in the market because of improving housing inventory conditions.”
US consumer sentiment unexpectedly fell for the first time in three months as lingering frustration with a high cost of living offset more sanguine views of the job market. The preliminary October sentiment index declined to 68.9 from 70.1 in September, according to the University of Michigan. Consumers expect prices will climb 2.9% over the next year, up from the 2.7% expected in September and the first increase in five months. While the rate of inflation has cooled over the past year, households remain troubled by high prices that they also see outpacing their income gains in the year ahead. “Despite strong labor markets, high prices and inflation remain at the top of consumers’ minds,” Joanne Hsu, director of the survey, said in a statement.
U.S. retail sales increased solidly in September, likely as lower gasoline prices gave consumers more money to spend at restaurants and bars, supporting the view that the economy maintained a strong growth pace in the third quarter. The slightly stronger-than-expected rise in sales reported by the Commerce Department also reflected sharp increases in receipts at clothing store outlets as well as miscellaneous store retailers. Though labor market momentum has slowed, layoffs remain historically low, supporting wage gains. “Strong consumer spending in September suggests economic growth in the previous quarter was solidly above trend,” said Jeffrey Roach, chief economist at LPL Financial.
