After seven straight weekly increases and one week of holding still, the average 30-year fixed mortgage rate finally moved the other way, falling to 7.32% from 7.40%.
It is the first weekly decline since August, and the rate is still more than a full point above the 6.19% buyers saw a year ago.
The drop did not come out of nowhere: the 10-year Treasury yield has been sliding for two weeks, and it closed Friday at 5.00%, its lowest Friday close this month.
Last week I wrote that if the pullback in yields held, relief would show up in the mortgage readings, and this week it did.
Now comes the real test: the Federal Reserve meets tomorrow and Wednesday to decide its next rate move.
This Week's Numbers
These are the same numbers every Monday, so you can see the pattern build over time.
All property numbers cover single-family homes and condos/townhomes only (no multifamily, land or commercial).
Local numbers cover the Bellingham metro area, which is all of Whatcom County.
Listings and list price show what sellers are asking, and the two closed-sale rows show what homes actually sold for, with a lag.
What The Numbers Say
Rates.
The pause I described last week became a decline, with the 30-year fixed giving back 8 basis points to 7.32% as it followed the 10-year yield down.
Yields lead mortgage rates by a week or two, and the yield's weekly average has now fallen for two straight weeks, from 5.26% to 5.15% to 5.07%.
Inflation.
There was no new inflation reading this week, so September's hot 3.7% print is still the number hanging over the Fed's meeting.
Jobs.
The local surprise of the week: Whatcom County's unemployment rate fell right back to 3.5% in September, after August's jump to 4.5%.
Employers reported about 1,200 more jobs on county payrolls, and September's 3.5% rate is better than the 3.9% of a year ago.
August now looks like a blip rather than a trend, which is exactly the question I said I was watching last week.
Inventory and closed sales.
There is no new local reading this week, since the monthly files update at month end, so September's 1,004 homes for sale and estimated 234 closed sales still stand.
How These Numbers Connect To Your Mortgage Rate
Mortgage lenders watch the 10-year Treasury yield when they price most fixed home loans, though it is not the direct benchmark for every loan.
Investors who buy mortgage bonds compare them to Treasuries, so when the 10-year yield moves, mortgage rates follow.
Lenders then add a cushion on top, usually around two percentage points.
This week that gap was about 2.25 points (a 7.32% mortgage rate versus a 5.07% weekly average yield), and the drop in your rate tracked the drop in the yield.
Over the last ten years that gap has averaged about 2 points, so this week's reading sits close to the usual range.
Jobs and inflation sit behind the yield.
This week the yield kept falling even with hot inflation still fresh, and that is why your rate finally came down.
Our local unemployment rate works differently.
It does not move mortgage rates, which are set nationally.
It tells us how confident and how able Whatcom buyers are, and September's bounce back to 3.5% says our local buyer pool is on steadier footing than August suggested.
So I watch the national numbers to see where your rate is going, and the local numbers to see how our buyers will handle it.
What This Means For Buyers
The math is still the story, but this week it finally moved in your direction.
On a $645,000 home with 20% down, the monthly principal and interest payment is about $3,545 at 7.32%, roughly $28 less than the same quote a week ago.
At last year's 6.19% the payment would be about $3,157, so the gap to a year ago is still roughly $388 a month for the same house.
The Fed meets this week, and while investors widely expect it to hold steady, its statement can move bond yields and your next quote in either direction.
If you are writing an offer soon, get a fresh pre-approval before Wednesday's announcement and be ready to lock once we see how the market reacts.
What This Means For Sellers
Falling rates help you too, because every bit of rate relief brings sidelined buyers back into the pool.
The closed numbers still tell a cautious story: September's estimated 234 sales were down 18.5% from a year ago, and the median closed price sat under $600,000 in August.
Homes priced to today's payment reality still get attention, and this week's rate drop improves that reality a little.
If you are thinking about selling before the holidays, price against today's rates, not last spring's, and expect to negotiate.
What The Fed Is Saying
Freddie Mac's chief economist Sam Khater kept it simple on Thursday: "The average 30-year fixed-rate mortgage declined this week, offering some relief to prospective homebuyers."
The bigger voice comes Wednesday, when Fed Chair Kevin Warsh announces the Fed's decision after recommitting to getting inflation back down to its 2% goal.
Most forecasters expect the Fed to hold its benchmark rate steady after September's hike, the first in three years.
A hold is not the same as relief, because the Fed's language about what comes next is what bond traders will trade on Wednesday afternoon.
What I'm Watching Next
Wednesday, October 28: the Fed's decision and press conference, where a hold is expected but the language about inflation will move bond yields either way.
Thursday, October 29: the next mortgage rate reading, to see whether this week's decline starts a streak of its own.
End of the month: the October listings file, to see whether September's 1,004 homes for sale was the high-water mark for the year.
If you are thinking about a move this fall, schedule a 15-minute call and we can look at your numbers together.
Sources for reader review
Freddie Mac Primary Mortgage Market Survey (weekly 30-year rate) and the October 22 rate release with Sam Khater's comment
Washington Employment Security Department, Whatcom County profile (September unemployment)
Realtor.com Research, Whatcom County market data (listings and list prices)
USA Today, preview of the Fed's October 27-28 meeting
Property numbers cover single-family homes and condos/townhomes only.
