Mortgage Rates in the U.S. Hit Their Lowest Level Since October

In the United States, mortgage rates have recorded a significant decline, reaching their lowest level since mid-October, which has led to an increase in home purchase financing. According to data released by the Mortgage Bankers Association (MBA) on Wednesday, the contract rate for 30-year fixed mortgages decreased by 17 basis points to 6.69% for the week ending November 29. This is the largest weekly drop recorded since August.

The MBA's index for home purchase applications rose by 5.6% on a seasonally adjusted basis, reaching its highest level of the year. With an observed increase of around 18% over the past two weeks, this recent spike in applications is seen as part of a broader trend. However, the data also indicates that these figures may experience significant fluctuations during the year-end holiday period.

The decline in mortgage rates is closely related to a recent drop in Treasury yields, fueled by investor expectations that the Federal Reserve will adopt a more gradual approach to lowering its benchmark interest rate. There is an increasing expectation that the Fed may cut borrowing costs for the third consecutive time at its meeting scheduled for December 17-18. Nevertheless, several Fed policymakers have indicated a flexible stance.

Among these changes, the MBA noted that the refinancing index has fallen in nine of the last ten weeks, reaching its lowest level since May.