Mortgage rates ticked up this week as the U.S. economy showed signs of improvement.
The average U.S. rate for a 30-year fixed mortgage rose two basis points to 3.68% this week, Freddie Mac said on Wednesday. That brings the monthly average for November to 3.7%, compared with October’s 3.69%.
“Following a decline in the first nine months of 2019, mortgage rates have traded narrower during the last two months with a modest drift upward due to an improved economic outlook,” said Sam Khater, Freddie Mac’s chief economist.
The rate for a 15-year fixed home loan was unchanged at 3.15% while the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.43%, up from last week’s 3.39%, Freddie Mac said. This week’s survey is based on a smaller sample because of the Thanksgiving holiday.
Mortgage rates move in tandem with demand for bonds, which diminishes when the economy shows signs of improvement. Recession fears began abating after the Federal Reserve made three cuts to its benchmark rate and the yield curve – seen as a harbinger for economic contraction – reverted to an upward-sloping path.
“Fears about an imminent recession have faded considerably,” Wells Fargo economists wrote in a report this month. “The Fed has shown that it will do what it takes to offset the headwinds from slower global economic growth and continued uncertainty around U.S. trade policy.”
The U.S. economy grew at a 2.1% annualized pace in the third quarter, the Commerce Department said in a report on Wednesday showing acceleration from the second quarter’s 2%. That surprised many economists who expected the Commerce Department’s second estimate to be unchanged at 1.9%, based on an average of the projections.
Fed officials voted to cut the central bank’s benchmark rate at each of their last three meetings to stimulate a slowing economy. Chairman Jerome Powell said the official outlook on the economy was positive and said the policymakers planned to keep rates steady, barring a significant development.