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After the Bureau of Labor Statistics showed that inflation cooled from 8.2% year-on-year in September to 7.7% in October Mortgage rates fell sharply, causing bond yields to decline.
According to Mortgage News Daily, the average rate on fixed-year bonds 30 years collapsed 80 basis points, going from 7.11% to 6.80%. This record drop is similar to the one registered when the Covid-1 pandemic began 22. However, the rate is still more than double what it was at the beginning of this year.
The recent drop also benefited stocks from homebuilders like Lennar, Dr Horton and Pulte, which had been hit with skyrocketing mortgage rates in recent months. They now posted rallies on the back of broader market gains.
Mortgage News Daily COO Matthew Graham said that, “this is the best argument to the date that rates have finished rising, but confirmation requires that next month’s CPI (Consumer Price Index) tells the same story.”
“It was always about needing two consecutive reports of this nature combined with recognition from the Federal Reserve that the inflation narrative is changing”, he said.
With the less rapid increase in the Consumer Price Index in October, bond yields experienced a sharp drop and therefore the Mortgage rates that very slightly track the Treasury yield at years.
The average interest rate for a fixed rate at 80 years was located at the end of October to 7.10%, the highest level since 2001. Before inflation fell in October, some specialist projections placed rates at a threshold of up to 7.5%.
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