Mortgage rates

For the past week, the benchmark 10-year Treasury closed above 4%, as the markets priced in an increase in the consumer price index.

December's shift in Federal Reserve policy gave a notable boost to the share of consumer respondents who think the affordability of home financing will improve.

The year-end yield on the bond, a global anchor for markets and U.S. mortgage rates, is the culmination of a stunning rebound for Treasuries.

The U.S. may be less rate-sensitive than other countries due to its long-term mortgages but could face tighter credit from hard-hit financial institutions.

But the decline may be close to its floor, as wide spreads compared to 10-year Treasury yields hinder how far averages could fall.

Values declined in two regions and were flat in two others, according to the Federal Housing Finance Agency.

The S&P CoreLogic Case-Shiller index measures a period when 30-year mortgage rates were climbing toward 8%, shutting out increasing numbers of would-be homebuyers.

Rates that have been below 7% for two consecutive weeks have given originators a gift at what's typically a slow time of year, Freddie Mac said.

The enterprise is now calling for a recession to start in the second quarter of next year, with negative growth expected for the full year.

The Fed's announcement is responsible for a 19 basis point drop in the 10-year yield over a two-day period, pushing the 30-year fixed under 7% for the first time since August, Freddie Mac said.

Recent economic data pushed investors toward Treasurys over the past week, driving 10-year yields to as low as 4.1%.

Heightened government-backed activity also helped bring the average loan size down to its lowest mark in 2023, with purchase amounts falling below $400,000 for the first time since January, the Mortgage Bankers Association found.

The 30-year average declined for the fifth consecutive week, as purchase demand picking up at the same time, according to Freddie Mac.

Even if the 30-year fixed were to slip further to 6.4%, it is not enough to end the seller's strike, economists said.

The market's reaction to the Consumer Price Index report on Tuesday helped to push the 10-year Treasury and 30-year fixed-rate loan lower, Freddie Mac said.

Freddie Mac's survey finds the 30-year fixed loan dropped 3 basis points, but Zillow's tracker showed since the FOMC announcement, they dropped 30 basis points.

At the same time, the 15-year fixed rate loan rose above 7% for the first time in nearly 23 years, Freddie Mac reported.

The Fed's higher for longer statements have pushed up the 10-year Treasury in recent weeks to levels last seen in 2007 and that is affecting pricing.

But the industry will still have to go through some pain in 2024, Wharton Professor Susan Wachter told attendees at the Mortgage Bankers Association annual convention.

While great progress has been made towards the goal of reducing capacity by 30%, job reductions should continue for several more quarters.