Mortgage Rates Decrease, Reversing Trend

Mortgage rates have reversed their recent upward trend, decreasing for the first time in several weeks.

The MBA noted that mortgage application volume also declined in the past week, citing high prices and low inventory challenges for home purchase activity. Economic growth slowed in the third quarter, with real GDP rising at a 2% annual rate, slightly lower than market expectations. Economic growth is being constrained by supply chain issues, and consumer spending appears to be slowing down as well. With inflation indicators largely meeting expectations last week, rates got some relief as markets recalibrated interest rate expectations during the week. The Federal Reserve announced today they will be tapering bond purchases that were in-line with market expectations at 15 billion per month (10 billion in Treasuries and 5 billion in MBS) for November and December and gave themselves flexibility to adjust the pace going forward if warranted by economic conditions.

Next up for economic data will be jobless claims on Thursday and payroll and unemployment rate data on Friday. Markets will be looking for any signals of further tightening in labor markets and the potential impacts on economic recovery and inflationary pressures.