Key Highlights

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

The Numbers Behind 7.24 percent

The 30-year mortgage rate stands at 7.24 percent, 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 percent at Thursday's close and near 4.94 percent in Friday premarket quotes, a spread of roughly 2.2 to 2.3 points, which is 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 trim the rate even though it remains historically high.

Why Housing Stocks Rallied Anyway

On October 29 the real estate sector rose 2.2 percent, among the strongest groups on a day when the S&P 500 fell 0.30 percent and about 81 percent of its stocks advanced. The move looks like rotation: investors stepped away from technology and bought defensive and rate-sensitive names as the 10-year yield eased from 5.05 percent 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 XHB (NYSEARCA:XHB) is cited here. High mortgage rates still restrain buyers, and the 30-year Treasury yield near 5.32 percent keeps long rates elevated.

Risks and What to Watch

Inflation is the main risk. September PCE rose 3.6 percent year over year, Q3 GDP grew 3.4 percent, and the Fed held at 3.75 percent to 4.00 percent in a 10 to 2 vote, with two dissenters favoring a hike, keeping about 80 percent 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, with consensus at 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 percent because long-term yields, near 5 percent 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.