Rates for several types of mortgages fell more than half a percentage point Thursday, with 30-year fixed-rate mortgages averaging 6.62 percent.

New markets require new approaches and tactics. Experts and industry leaders take the stage at Inman Connect New York in January to help navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here.

Mortgage rates dropped by more than half a percentage point Thursday as bond market investors reacted to a report that inflation moderated in October, potentially giving the Federal Reserve leeway to slow the pace of rate increases.

The Bureau of Labor Statistics report shows inflation, as measured by the consumer price index, cooled to an annual rate of 7.7 percent in October, down from 9.1 percent in June. At 6.3 percent, core inflation — which excludes food and energy prices — was down from 6.6 percent in September.

Yields on 10-year Treasurys, a bellwether for mortgage rates, posted their biggest decline in more than a decade Thursday, falling more than 30 basis points from Wednesday’s close of 4.15 percent. At 3.82 percent, Thursday’s low was the lowest yield on 10-year notes since Oct. 3.

Rates on several types of mortgages plummeted by about 60 basis points Thursday, according to a daily index compiled by Mortgage News Daily. MND’s index showed rates for the workhorse 30-year fixed-rate mortgage falling to 6.62 percent Thursday, down from 7.22 percent the day before.

At each of its last four meetings, the Fed has implemented drastic, 75-basis point increases in the short-term federal funds rate. Just last week, futures markets were pricing in a 48 percent chance of another big, 75-basis point rate hike at the Fed’s final meeting of the year in December.

The CME FedWatch Tool, which monitors futures contracts to calculate the probability of Fed rate hikes, showed traders on Thursday pricing in an 85 percent chance that the Fed will slow the pace of rate increases, and only hike the federal funds rate by 50 basis points on Dec. 14.

KPMG Chief Economist Diane Swonk tweeted that while today’s CPI data will be important to policymakers, shelter costs — which the Bureau of Labor measures in terms of rents, and owners’ equivalent rent — are a lagging indicator.

According to the latest CPI report, housing costs were the biggest driver of core inflation with the shelter index posting its biggest monthly increase since 1990.

But Swonk predicted that inflation in the shelter category will ease “much more rapidly than many, including the Fed, will expect,” and that weakness in housing will also undermine prices for “big ticket goods and stuff we bought to make quarantines tolerable.”

Asking rents declined in October at a rate not seen since the beginning of the COVID-19 pandemic, according to a report from rental data aggregator RealPage. The 0.6 percent decline in asking rent was the biggest cut since 2010, excluding April and May 2020, when the pandemic was getting underway. Home prices are also decelerating fast, with economists at Fannie Mae among those projecting home price declines next year.

While financial markets have “been yearning for a Fed pivot,” Swonk warned that “This is not the kind of pivot anyone should want given the risk of a much deeper and scarring recession.” A bursting housing bubble, she said, can be “a disorderly process”

“The house of cards on the pandemic-induced bubble and the residual of years of subpar, slow growth, tepid inflation and ultra low rates is now collapsing,” Swonk tweeted. “The spillover effects for the economy, interest rates and the economy will be larger. It will be easy to blame one player.”

The collapse of cryptocurrency exchange FTX, once valued at $30 billion, is also sparking speculation about more widespread repercussions for financial markets.

Crypto “is having a Lehman moment of its own — but without the government backstop,” Jeff John Roberts wrote in his Fortune Crypto newsletter. After rival exchange Binance pulled out of a deal to acquire FTX, investors including venture capital firm Sequoia are writing down the value of their shares in the company to zero, Axios reported.

Sequoia said its $150 million losses in FTX amount to less than 3 percent of the capital committed to its Global Growth Fund III, and is offset by approximately $7.5 billion in gains in the same fund.

In other news this week, a Canadian real estate lender Romspen Investment faces a liquidity crunch and has halted redemptions on its largest fund after some borrowers failed to make scheduled payments, Baystreet reported.

Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription