Mortgage rates fall below 7% in the largest weekly drop since July as inflationary pressures ease

• A key US mortgage rate fell below 7%, marking the largest weekly fall since July, the Mortgage Bankers Association said Wednesday.
• The average interest rate on a 30-year fixed-rate mortgage was 6.9%, down from 7.14%.

A key lending rate for US home purchases has slipped below 7%, the Mortgage Bankers Association said Wednesday, as signs emerge that inflation is cooling from scorching levels.

The average interest rate on a 30-year fixed-rate mortgage was 6.9% in the week ended November 11, down from 7.14% a week earlier. The move marked the largest single-week decline since July. The industry group said its weekly survey included an adjustment for the Veterans Day holiday.

"Mortgage rates decreased last week as signs of slower inflation pushed Treasury yields lower," Joel Kan, deputy chief economist at MBA, said in a statement.

Treasury yields had spiked up to multiyear highs during 2022 with the Federal Reserve ratcheting up interest rates to tame inflation. But bond yields have pulled back recently as various reports show easing in prices for housing, energy, and food – indicating inflation levels may have reached their peak.

The closely watched 10-year Treasury yield has been running lower since the government's October consumer price index report was released last week. Headline inflation of 7.7% came in below estimates. The 10-year yield was 3.72% on Wednesday, down from 4.21% on the day the CPI report hit.

Kan said application activity increased in response to the drop in rates, driven by a 4% rise in home purchase applications.

Mortgage application volumes rose by 2.7% from a week earlier. But refinance applications fell by 2% on a weekly basis and were down 88% over the year.

"There is very little refinance incentive with rates so much higher than last year," Kan said.