Mortgage Rates Climb Again, Pushing Homebuyers to the Sidelines: Freddie Mac

Mortgage rates continued their upward climb this week, nearing 7 percent and further cooling homebuyer demand, according to Freddie Mac.
Household budgets have been strained by several years of high inflation. Freddie Mac chief economist Sam Khater noted that buyers have become highly rate-sensitive under the current circumstances.
“It is clear purchase demand is very sensitive to mortgage rates in the current market environment,“ Khater said. ”As soon as rates began to rise in early October, purchase applications fell and over the last month have declined 10 percent.”
Refinance activity has also taken a significant hit as rates have risen. According to the MBA’s latest survey, mortgage-refinance applications plummeted 19 percent last week. Joel Kan, the MBA’s vice president and deputy chief economist, attributed this to ongoing volatility in 10-year Treasury yields, which are a key benchmark for mortgage rates.
“Ten-year Treasury rates remain volatile and continue to put upward pressure on mortgage rates,” Kan explained in a statement.
Various factors affect 10-year yields, including Treasury issuance and shifts in investor sentiment. More government borrowing would drive issuance—and yields—higher, with risk-on market sentiment having a similar effect as investors dump the relative safety of Treasurys in favor of riskier assets like stocks. Treasury yields and prices move inversely, with bond selloffs driving yields higher.