Just one day after the Federal Reserve raised its benchmark rate, mortgage rates took a sharp turn lower.
The average rate on the popular 30-year fixed mortgage fell to 5.22% on Thursday from 5.54% on Wednesday, when the Fed announced its latest rate hike, according to Mortgage News Daily. The rate fell even further Friday to 5.13%.
Rates hadn’t moved much in the days leading up to the Fed meeting earlier this week, but they had been slowly coming off their most recent high in mid-June, when the 30-year fixed briefly crossed 6%.
A sign is posted in front of a home for sale on July 14, 2022 in San Francisco, California. The number of homes for sale in the U.S. increased by 2 percent in June for the first time since 2019.
Justin Sullivan | Getty Images
The drop Thursday also came on the heels of the Bureau of Economic Analysis’ gross domestic product report, which showed the U.S. economy contracted for the second straight quarter. That is a widely accepted signal of recession. GDP fell 0.9% at an annualized pace for the period, according to the advance estimate. Economists polled by Dow Jones had expected growth of 0.3%.
After the news, investors rushed to the relative safety of the bond market, causing yields to fall. Mortgage rates loosely follow the yield on the 10-year U.S. Treasury bond.
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“This is an exceptionally fast drop!” wrote Matthew Graham, COO of Mortgage News Daily. “Perhaps even more interesting (and uncommon) is the fact that…
