Mortgage rates bounce back up after month of drops

After a month of consecutive drops, mortgage rates ticked back up this week, following the 10-year Treasury.

The 30-year fixed-rate mortgage averaged 6.22%, up five basis points from last week's mild drop of two basis points to 6.17%. according to Freddie Mac's Primary Mortgage Market survey. The 30-year rate was 6.79% a year ago.

"On a median-priced home, this could allow a homebuyer to save thousands annually compared to earlier this year, showing that affordability is slowly improving," said Sam Khater, Freddie Mac's chief economist.

The 15-year fixed-mortgage rate climbed even higher, averaging 5.50% compared with last week's 5.41%. The 15-year rate was 6% this time a year ago.

The Federal Reserve's benchmark rate cut of 25 basis points has not done much for mortgage rates yet, resulting in a three basis point rise thus far. 

But the diminished impact could be a result of Chair Jerome Powell's comments at the Federal Open Market Committee Meeting, in which he threw doubt on expectations for another cut in December. Since Powell's comments, the 10-year Treasury has risen from 3.98% the morning of the meeting to 4.08% as of noon Thursday. 

The slight increase stays in line with Zillow's comments last week that the 30-year rate will remain confined within the 6%-7% range for the time being.

Still, the rise was reflected in the application activity for the week ending Oct. 31. Overall mortgage loan application volume decreased 1.9% on a seasonally-adjusted basis from the week prior, while the Refinance Index and Purchase Index fell 3% and 1%, respectively, according to the Mortgage Bankers Association's Weekly Application Survey released on Wednesday.

"Mortgage rate movements were mixed last week as Treasury yields moved slightly higher following last week's FOMC meeting," said Joel Kan, MBA's vice president and deputy chief economist. "Despite a decline last week, refinance applications are still significantly higher than a year ago."