Mortgage rates fall sharply after negative GDP report and Fed's latest hike
Mortgage rates fall sharply after negative GDP report and Fed's latest hike
Abstract
Just one day after the Federal Reserve raised its benchmark rate, mortgage rates took a sharp turn lower. The average rate on the popular 30-year fixed mortgage fell to 5.22% on Thursday from 5.54% on Wednesday, when the Fed announced its latest rate hike, according to Mortgage News Daily. Mortgage rates follow loosely the yield on the U.S. 10-year Treasury bond. "Perhaps even more interesting is the fact that mortgage rates have dropped faster than U.S. Treasury yields. It's typically the other way around as investors flock first to the most basic, risk-free bonds." Graham said the big picture shift in rates over the past month has created a situation where investors greatly prefer to be holding mortgage debt with lower rates. "In a way, mortgage investors are trying to get ahead of the game. If they're holding mortgages at a higher rate, they will lose money if those loans refinance too quickly," he added. Real estate brokerage Redfin just reported seeing a slight uptick in searches and home tours in the past month, as rates came off their recent highs. "We may still be in for some surprises when it comes to inflation and rate hikes from the Fed, but for now an ease in mortgage rates has brought some relief to buyers who were reeling from last month's rate spike." The increase in buyer interest has not translated into new contracts, nor sales.