Weekly Mortgage Update: Rates, Applications, and Inventory Trends

What a rollercoaster of a week in the mortgage market! Almost breaking the 7% barrier, mortgage rates and the 10-year yield are making headlines, while discussions about potential Fed rate cuts in 2024 are gaining traction. In this week’s tracker, we break down the key highlights to keep you informed in real-time.

Positive Vibes in Purchase Applications

Surprise, surprise – an early Christmas gift for prospective homebuyers! Mortgage rates have taken a nearly 1% dip in a short span, sparking four consecutive weeks of positive purchase application data. But, before we pop the champagne, a reality check is in order. While last week saw a 5% increase in purchase applications, we’ve had 22 positive weeks, 23 negative weeks, and one flat week this year. As the year wraps up, the positive momentum might just tip the scales in favor of a positive year-to-date count.

Mortgage Rates and the 10-Year Yield

Guess who’s back? The 10-year yield closed below 4.25%, and mortgage rates wrapped up the week at 7.09%. Reflecting on the 2023 forecast, the 10-year yield range was predicted to be 3.21%-4.25%, translating to mortgage rates between 5.75%-7.25%. The “Gandalf line” at 3.37% held strong, and with the economy surpassing expectations in Q3, the 10-year yield crossed the 5% mark. With the Fed easing up, mortgage rates edged down from 7.32% to finish at 7.09%, hinting at the potential for rates under 6% if the spread behaves as expected.

Seasonal Decline in Housing Inventory

December marks the onset of the seasonal decline in housing inventory, and 2023 has seen a variance from predicted inventory growth with higher mortgage rates. Contrary to expectations, the weekly inventory change shows a decrease from 565,875 to 555,717. Last year’s seasonal peak was Oct. 28, while this year’s seems to be Nov. 17. The positive note is the formation of a bottom in new listings data, indicating that higher mortgage rates didn’t deter sellers. The new listings data, price cuts, and inventory figures all play a role in shaping the real estate landscape for the rest of 2023.

Jobs Week Ahead

As we gear up for the week ahead, it’s Jobs Week! With significant moves in bond yields already, four labor data reports await us: job openings, ADP, jobless claims, and the grand finale – Jobs Friday. The resolution of labor strikes may contribute to a boost in the jobs report, but the bond market’s reaction to each labor report remains uncertain. Stay tuned as we navigate the intricacies of the job market’s impact on the mortgage landscape. It’s bound to be an interesting week!

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