November Mortgage Outlook: Rates on the Rise

"Mortgage rates are likely to rise in November, as a December cut from the Federal Reserve has started to seem uncertain. Mortgage interest rates fell ahead of Fed cuts in September and October, because mortgage lenders worked market predictions into their base rates instead of waiting for confirmation. Even though markets are leaning toward a third consecutive cut at the Federal Reserve's Dec. 9-10 meeting, there's enough doubt that staying in wait-and-see mode feels more appropriate."

"In the committee's discussions at this meeting, there were strongly differing views about how to proceed in December," he noted in his opening remarks. "A further reduction in the policy rate at the December meeting is not a foregone conclusion." Markets had pretty much decided a 25-basis-point cut in December was a sure thing, so reactions to Powell's comments were swift. Stocks went down, Treasury bonds and mortgage rates - which tend to move together - went up."

"There's still enough of a chance for another Fed cut in December that mortgage rates aren't likely to ramp up dramatically this month, but expect higher rates than we saw in October. If inflation appears to be gathering steam, that would make upward movement more decisive. Raising the federal funds rate is the Federal Reserve's method for curbing inflation. Strong enough inflation wouldn't just take a rate cut off the table; it could open up the possibility of a rate hike."

Mortgage rates are likely to rise in November as a December Federal Reserve rate cut becomes uncertain. Mortgage lenders pushed rates lower ahead of expected Fed cuts in September and October by pricing market expectations into base rates. Markets still lean toward a December cut, but mixed Fed views and Chair Powell's comments increased uncertainty and pushed stocks and Treasury yields down. Rates are unlikely to fall decisively below 6%; many recent borrowers with rates near 7% remain positioned to refinance to lower rates. If inflation gathers steam, rates could move higher, and a weakening labor market could alter the outlook.

Read at SFGATE