Mortgage rates declined for the second week in a row, resulting in an uptick in both refinance and purchase applications.
Jobless claims and unemployment rates continued to decline, with strong gains in job growth reported last week in the October Jobs Report. While employment and inflation data continue to suggest a Fed rate hike sometime next year, a surprising dovish tone from the Bank of England (BOE) resulted in lower interest rates in many markets as investors reacted to the BOE leaving rates unchanged. This downward move also triggered some technical adjustments in positions that were expecting higher rates in the near term, increasing demand for bonds by these participants. With light supply in the mortgage-backed securities market over the last week, mortgage rates ended the week lower. In this current environment, we are seeing more volatility in markets and anticipate rates will be more sensitive to economic data in the coming weeks.
Markets will be looking for signs of strength in the economic recovery and any additional upward trends with inflationary measures. Supply chain issues continue to be a dominant theme as markets look for any indication that supply chain challenges are waning.