Key Highlights

  • The 30-year Mortgage rate is 7.24%, down 8 basis points, per a mortgage-rate survey as reported whose name was not verified, a single-source figure to confirm before relying on it.
  • The 10-year Treasury Yield sits near 5%, so the gap to the mortgage rate is about 2.2 points, simple arithmetic on two published numbers, on a single-source mortgage figure.
  • Housing-sensitive stocks gained on October 29 as the real estate sector rose 2.2%, a bright spot for SPDR S&P Homebuilders ETF (NYSEARCA:XHB) watchers, though no fund move is cited.
  • Traders price about an 80% chance of a December Fed hike, with September PCE Inflation at 3.6% year over year, and Q3 GDP growth of 3.4%, limiting relief for XHB (NYSEARCA:XHB) holdings.

The Numbers Behind 7.24%

The 30-year mortgage rate stands at 7.24%, down 8 basis points from the prior reading, according to a mortgage-rate survey as reported. The survey's name was not verified, so treat the figure as single-source. The 10-year Treasury yield was about 4.98% at Thursday's close and near 4.94% in Friday premarket quotes, giving a spread of roughly 2.2 to 2.3 points, simple arithmetic on two published numbers. Mortgage rates track long-term Treasury yields plus a spread for lender costs and Credit risk, which is why a modest fall in yields on Thursday helped cut the rate even as it stayed historically high. Lenders also price in funding costs and prepayment risk, so the spread can widen when markets are volatile.

Why Housing Stocks Rallied Anyway

On October 29 the real estate sector rose 2.2%, among the strongest groups in a session when the S&P 500 fell 0.30% and about 81% of its stocks advanced. The reason looks like rotation: investors left technology and bought defensives and rate-sensitive names as the 10-year yield eased from 5.05% a day earlier. SPDR S&P Homebuilders ETF (NYSEARCA:XHB) holds homebuilders and related suppliers, which respond to mortgage affordability, but no verified price move for the fund is cited here. Lennar and other builders were not covered in this day's data. High mortgage rates still restrain buyers, and the 30-year Treasury yield near 5.32% keeps long rates elevated.

Risks and What to Watch

Inflation is the main risk. September PCE rose 3.6% year over year, Q3 GDP grew 3.4% and the Fed held at 3.75% to 4.00% in a 10 to 2 vote with two dissenters favoring a hike, keeping about 80% odds of a December increase. A hike or a renewed jump in the 10-year yield would push mortgage costs higher. iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) is the usual proxy for long-bond moves. Watch the 10-year yield, the next mortgage survey and the 9:30 a.m. ET open for XHB (NYSEARCA:XHB). The Chicago PMI, consensus 54.6 against 58.8 prior and due around 9:45 a.m. ET, is a smaller read on the economy.

Where Things Stand

The 30-year mortgage rate is 7.24% because long-term yields, near 5% on the 10-year, remain high after hot inflation and strong growth data, even though the rate dipped 8 basis points. Housing stocks rallied on October 29 on rotation and a small yield decline, not on a lasting change in affordability. The balance of evidence is mixed, and the mortgage figure is single-source. The next catalysts are the 10-year yield, the next mortgage reading and the December Fed decision.