Market Pulse

The 30-year fixed mortgage rate is hovering around 6.18% according to Freddie Mac and 6.21% based on a daily survey, showing a slight decrease this week. The 10-Year Treasury yield is currently at 4.136%, also showing a minimal decrease from previous days. This relative stability suggests a market taking a breather as we approach the holidays.

Key Drivers

The main driver behind this holding pattern is the Federal Reserve's decision to pause interest rate hikes. Cooling inflation, reflected in recent CPI data (325.031), is reinforcing this pause. News outlets are reporting expectations of gradual rate declines in 2026, contingent on the Fed cutting its benchmark rate. However, a recent report indicates that mortgage applications are down despite the rate dip, suggesting that high home prices and low inventory are still significant barriers to entry for potential homebuyers.

Outlook

Looking ahead, expect continued volatility but with a general trend towards stabilization or potentially modest declines in mortgage rates if economic data supports a less aggressive Federal Reserve policy. Keep a close eye on inflation reports and housing inventory levels, as these factors will significantly influence the trajectory of mortgage rates in the coming months. While the recent dip is a welcome sign, a more substantial market shift hinges on broader economic conditions.