Mortgage rates slip for a fourth week, nudging purchase demand higher

Rates ease, demand perks up

Mortgage costs drifted down once more, as the average contract rate for a 30-year fixed reached 7.21% during the week ending Nov. 6, a decline of 9 basis points. The Mortgage Bankers Association published the update on Wednesday and noted rates have backed off by nearly 30 basis points from 7.5% early last month, when costs were hovering around their highest levels in roughly two years.

That relief helped lift the MBA index of purchase applications by 7.5%, the strongest weekly pop since mid-April and only the second gain since late August. A small spark for a housing market that has been running cold.

Refi pulse and pending sales

Refinancing showed a smaller lift.

Even with lower rates, it may take a longer slide to pull more buyers off the sidelines. Contract signings on previously owned homes fell to a record low in September after mortgage rates spiked during that month.

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What to watch next

On Thursday, the National Association of Realtors is set to report October existing-home closings. Economists surveyed by Bloomberg expect a drop to the slowest pace since 2010.

What it means for your portfolio

Lower mortgage costs are drawing some buyers back, but the housing recovery remains tentative. For rate sensitive exposure - homebuilders, mortgage lenders, REITs tied to single family activity - the takeaway is momentum is improving off a low base, not roaring. If rates keep easing and activity follows, earnings leverage in these names could turn, but for now the data says early stirrings, not a breakout.

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