The average 30-year fixed rate mortgage was 6.32% yesterday, unchanged since the day before. The 15-year fixed mortgage rate stood at 5.45%, the same as one the day before. The 30-year FHA mortgage averaged 5.59% yesterday, having stayed the same. Meanwhile, the 30-year jumbo mortgage rate was 6.69%, reflecting no change.
The bigger picture
Friday should have been a good day for mortgage rates. But, sadly, they rose, though only modestly.
There was certainly pressure on them to fall on Friday. The shutdown was in its 38th day, and its impact on the economy was beginning to be felt. (It's day 41 today)
Shutdown bites
Last night, a rebel group of eight from the Democratic Party caucus in the U.S. Senate joined Republicans to allow the House measure to reopen the government to be picked up. Further progress "can’t happen unless the Senate unanimously agrees to dispense with other procedural steps that would delay action," says The Wall Street Journal.
So, the hurdles to a reopening are considerable. Here's what's happening in the meantime.
"More than 7,200 flights have been delayed and 2,200 canceled so far Sunday after reductions went into effect Friday at 40 high-traffic airports, in what officials say is an attempt to relieve pressure amid the record-long government shutdown," said NBC News yesterday evening.
Some travelers are now reworking their Thanksgiving plans to avoid flying, while others are contemplating canceling family get-togethers, said The New York Times, also yesterday.
Meanwhile, yet again yesterday, The Guardian reported from the food pantry and businesses close to the Wright-Patterson air force base in Ohio. "With tens of thousands of military personnel working without pay, and local contractors and civilian workers furloughed, the wider regional economy is in trouble," said the newspaper.
Staff couldn't get into the pantry's parking lot because it was full, as so many people sought help. And, of course, local businesses that rely on the custom of the base's military and civilian staff are struggling. The owner of restaurant Tik’s Thai Express, 15 minutes from the base, told The Guardian, "We’ve really lost most of our customers because of the government shutdown. It used to be really busy, but now it’s empty."
The more the shutdown hurts the economy, the lower mortgage rates should normally fall. But they could rise today on hopes created by last night's Senate vote.
Consumer sentiment sours
"The mood among consumers darkened in November as the government shutdown dragged on, according to a new survey released Friday," said MarketWatch on Saturday. "The University of Michigan’s consumer-sentiment index fell to 50.3 in a preliminary November reading, down from 53.6 in the prior month. That’s the lowest level since June 2022 [when inflation was raging], which was the lowest level on record."
Again, that news would normally drag mortgage rates lower. Normally, as we suggested on Friday, consumer expenditures make up about 70% of America's gross domestic product, and nervous consumers may spend less, reducing GDP.
But our GDP's reliance on consumers may be shifting as the vast multi-trillion-dollar investment in AI infrastructure takes hold. And that leads us to the first reason why mortgage rates may have risen on Friday despite those downward pressures.
Commercial mortgage-backed securities affect mortgage rates
Raising those trillions for AI isn't easy, suggested The New York Times DealBook e-newsletter on Saturday. And "companies have leveraged a growing list of complex debt-financing options."
"According to an investor offering sheet obtained by DealBook, Blackstone is on the cusp of closing a $3.46 billion commercial-mortgage-backed securities (C.M.B.S.) offering to refinance debt held by QTS, the biggest player in the artificial intelligence infrastructure market," said The Times. "It would be the largest deal of its type this year in a fast-accelerating market. (Blackstone declined to comment.)"
CMBSs compete directly with the standard MBSs that provide financing for residential mortgages. Both are types of bonds.
You'll remember the law of supply and demand from Econ 101. Given constant demand, additional supply (in this case, of bonds) lowers prices. And the additional CMBSs could considerably reduce the price of all MBSs.
That sounds fine until you remember that, with all types of bonds, it's a mathematical certainty that bond prices move inversely to bond yields. And it's the yields on MBSs that largely determine mortgage rates.
Thus, the additional CMBSs are likely to push up all MBS yields and so mortgage rates.
Supreme Court tariff ruling another danger
The Supreme Court could rule on the legality of the current tariff regime at any time. And betting site Kalshi was putting the odds of the court finding in favor of the government down at 22% yesterday evening.
On Friday, The Wall Street Journal's Markets A.M. e-newsletter explained why such a finding could be an issue:
"More than $100 billion will have been collected from the specific tariffs being debated by the time a decision is reached. The prospect of at least some being refunded is enough to affect federal borrowing needs. Even without rebates, collections could drop sharply while the White House finds legal workarounds to impose new levies.
"It’s ironic: Tariffs initially spooked the bond market. Now that they’re helping to plug revenue lost to tax cuts, their potential absence worries investors."
This could be a problem, for mortgage rates for exactly the same reason CMBSs might be. There's only a limited demand for bond debt, and increasing the supply by issuing more Treasury bonds is likely to lead to lower prices, and so higher yields and mortgage rates.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.32% | 6.35% | +0% | -0.02% |
| 15-Year Fixed | 5.45% | 5.5% | +0% | +0.05% |
| 30-Year Fixed FHA | 5.59% | 6.8% | +0% | -0.06% |
| 30-Year Fixed VA | 5.66% | 5.8% | +0% | -0.09% |
| 30-Year Fixed USDA | 5.55% | 5.69% | +0% | -0.2% |
| 30-Year Fixed Jumbo | 6.69% | 6.7% | +0% | +0.01% |
| 5/6 Year ARM | 6.27% | 6.3% | +0% | -0.09% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.41% | 6.43% | +0% | +0.01% |
| 15-Year Fixed | 5.41% | 5.46% | +0% | +0.05% |
| 30-Year Fixed FHA | 5.56% | 6.77% | +0% | -0.05% |
| 30-Year Fixed VA | 5.69% | 5.83% | +0% | -0.07% |
| 5/6 Year ARM | 6.38% | 6.41% | +0% | +0.04% |
What's coming up?
Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates. News items concerning employment, inflation, tariffs and deficit funding are especially influential at the moment.
The shutdown means almost no official economic data will be published until the government reopens. So far, there has been only one exception: For legal reasons, the delayed September consumer price index was published on Oct. 24.
Nothing else is expected to be released by the government before the shutdown ends. But data compiled by non-governmental sources should be published as normal.
Mortgage rates today
There are no economic reports on today's MarketWatch economic calendar. There is a minor one due tomorrow, but bond markets will be closed for the Veterans Day holiday.
That means mortgage rates shouldn't move that day, and this column will take a day off. See you first thing on Wednesday!
