Mortgage rates in the United States fell for the second consecutive week, providing some relief to homebuyers and borrowers. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $766,550) dropped to 6.69% for the week ending November 29, 2024. This represents the lowest rate in six weeks, down from 6.86% in the prior week, according to the Mortgage Bankers Association (MBA). This decline marks the biggest weekly slide in mortgage rates since August 2024.

Factors Behind the Decline

The drop in mortgage rates comes after a period of rising borrowing costs earlier in November, which were largely driven by increasing Treasury yields. These yields had surged following the outcome of the 2024 US presidential election, where Donald Trump secured a victory, and expectations mounted for a slower pace of Federal Reserve rate cuts. As Treasury yields have begun to stabilize, mortgage rates have followed suit, providing a more favorable environment for homebuyers.

Mortgage Applications on the Rise

Alongside the falling rates, mortgage applications also increased. In the week ending November 29, 2024, mortgage applications rose by 2.8%, continuing a positive trend that has been observed for four consecutive weeks. This follows a 6.3% increase in the previous week. The increase was primarily driven by a surge in purchase activity, as more prospective homebuyers sought to lock in favorable mortgage rates before further changes.

On the other hand, refinancing activity saw a decline, continuing a trend seen in recent weeks. This may be due to the fact that many homeowners who could benefit from refinancing have already taken action during previous periods of lower rates, and current conditions may not be as appealing for refinancing.

Current Mortgage Market Conditions

The drop in mortgage rates to 6.69% brings some relief to borrowers who had been grappling with higher rates in the past months. However, rates are still above the historic lows seen in previous years, and this is reflected in the ongoing challenges for refinancing. While some homeowners continue to look for opportunities to purchase homes or refinance, the broader market remains sensitive to rate movements and economic conditions.

In summary, while mortgage rates are easing, mortgage applications are on the rise, particularly in the purchase segment. However, the broader economic environment, including Federal Reserve policy and Treasury yields, will continue to influence future trends in mortgage rates and market activity.