Mortgage rates

For the second consecutive week, the 30-year fixed rate mortgage increased as investors were still sorting through the lack of information due to the shutdown.

Yields were higher by as much as three basis points, led by tenors more sensitive to changes in Fed policy.

The government shutdown added an additional dose of pessimism about the U.S. economy to panelists' outlooks, Wolters Kluwer said in its latest survey.

The number of highly qualified refinance candidates rose to 1.7 million, the most in three and a half years, as mortgage rates ease.

The 30-year fixed-rate mortgage rose five basis points from last week to 6.22%, while the 15-year rate increased nine basis points to 5.50%

Treasuries fell after the US government signaled that larger auction sizes are on the horizon, while signs of economic resilience hurt the odds a Federal Reserve interest-rate cut in December.

Now that quantitative tightening is ending, the debate on who should be the MBS buyer of last resort, Fannie Mae and Freddie Mac, or the Fed, is taking hold

Wall Street dealers expect Bessent to signal as soon as Wednesday, when his department releases a quarterly statement on debt sales, that issuance in the $30 trillion Treasury market will keep shifting in that direction.

Three Federal Reserve officials said they did not support the US central bank's decision to cut interest rates this week, citing inflation that remains too high.

The 30-year rate dropped just 0.2 percentage points, as Federal Reserve Chair Jerome Powell's recent comments caused Treasury yields to rise.

An index of contract signings held at 74.8 after climbing a revised 4.2% a month earlier to the highest level since March, according to National Association of Realtors data released Wednesday.

Mortgage loan application volume jumped 7.1% on a seasonally-adjusted basis last week, the Mortgage Bankers Association said.

Fannie Mae revised its economic and housing outlook for 2025 and 2026, projecting mortgage rates to hit 6.3% and 5.9%, respectively.

The industry analyst also described the significant refinance opportunity should rates decline slightly, and the threshold where home prices soften or firm up.

While expectations that another federal rate cut is on the way next week, other economic trends may be having a larger influence on mortgage lending.

While the Federal Open Market Committee has yet to meet this month, investor pricing of longer-term bonds helped mortgages by 11 basis points, Wallethub said.

While purchase volume is up 20% from last year, it was 5% lower than one week ago, although a 4% increase in refinance activity helped pick up the slack.

Mortgage Bankers Association economist Marina Walsh said lenders could be failing to close more loans as more consumers apply with multiple originators.

LendingTree found that during 2024, May's median price for a 1,500 square foot home was $194.20 versus January's $178.60, a difference of $23,400.

Observers believe the government shutdown and lack of data is keeping mortgage rates in the same narrow range, as investors have issues reading the tea leaves.