Mortgage rates went down immediately after the Fed raised its benchmark rate.
According to Mortgage News Daily, the average rate on the popular 30-year fixed mortgage fell to 5.0% on Thursday from 5.0% the day before.
In the days leading up to the Fed meeting, rates hadn't moved much, but they had been coming off their most recent high in June.
The GDP report showed the U.S. economy contracted for the second quarter in a row. That is a sign of a downturn. The advance estimate shows that GDP fell at an annual rate of 0.9%. Growth was expected to be less than the economists predicted.
The relative safety of the bond market caused the yield to fall. The yield on the 10-year Treasury bond is related to mortgage rates.
Matthew Graham is COO of Mortgage News Daily. The fact that mortgage rates have dropped faster than US Treasury yields is unusual.
The big picture shift in rates over the past month has made investors prefer to hold mortgage debt with lower rates.
Mortgage investors are trying to get ahead of the game in order to make more money.
If the market is in a new range, rates will settle where they are currently.
If rates reverse course, volatility could go in the other direction. If the economy continues to be gloomy and inflation moderates, mortgage rates could go even lower.
Lower rates seem to be having a small effect on potential buyers. There was a slight increase in searches and home tours in the past month as rates came off their highs.
The housing market seems to have settled into an equilibrium now that demand has leveled off. We may be in for some surprises when it comes to inflation and rate hikes from the Fed but for now an ease in mortgage rates has brought some relief to buyers who were reeling from last month's rate spike.
The increase in buyer interest doesn't translate into new contracts or sales. There are more sellers dropping their asking prices as the supply of homes for sale increases.
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