Have Mortgage Rates Peaked In 2023?

Last week was marked by a flurry of activity in the job market, generating a wealth of data that caught the attention of the Federal Reserve. This begs the question: have we reached the peak of mortgage rates for 2023 due to these labor reports? 

Nationally, last week saw:

• Active listings increase 5,654
• Average mortgage rates dropped from 7.37% to 7.08% (our preferred lender is still significantly lower than this)
• Purchase applications also climbed by 2% on a week-to-week basis.

Mortgage rates and the bond market

Mortgage interest rates typically move in the same direction as the 10-year US Treasury Bond. Despite a rise in the 10-year yield after the jobs report, mortgage rates remained steady.

But in 2023 a notable change has occurred since the banking crisis in February. The difference between mortgage rates and the 10-year yield worsened, leading to higher mortgage rates than most people anticipated. 

Housing Market

Year-over-year the number of new listings is still around a 12 month low, but it hasn't continued to go dramatically lower. The expectation is for inventory levels across the country and especially in South Florida to remain stable but low through the rest of the year. With such limited inventory, even with higher rates prices are not expected to come down any time soon. The market could easily absorb a doubling of inventory, if not more, and still be in a seller's market.

Purchase application data showed a 2% uptick in the past week, but consistent interest rates at or around 7% should continue to make the market slower and lead to significantly fewer sales than we saw during 2020-2021.