For the first time this year the United States' gross domestic product (GDP) showed positive growth. Whether or not that's sustainable is anyone's guess, but this pulls the U.S. out of the technical recession spurred by consecutive quarters of negative GDP growth experienced earlier in the year.

The 2.6% Q3 GDP advance estimate was above the 2.4% forecast and also showed some positive signs of waning inflation. The chain-weighted consumer price index (chained CPI) rose by 4.1% for the quarter which was below the 5.3% estimate. The chained CPI is similar to the traditional CPI but adjusts to reflect consumer behavior. Also, headline inflation rose by 4.2% down from the previous quarter's reading of 7.3%. 

This information came out less than a week before the Federal Open Market Committee (FOMC) is set to meet and ostensibly raise the federal funds rate by another 75 basis points. The European Central Bank raised its rates by 75 basis points in the last week of October. 

The GDP report caused the 10-year Treasury note yield to fall back below 4%, hitting just over 3.93%. Mortgage rates tend to follow the trajectory of the 10-year Treasury note yield which has been extremely volatile over the last few months. That is why it is extremely important as a potential homebuyer to be in touch with your Movement Mortgage loan officer who monitors rate movements regularly and can help you make the best decision for your individual financial situation. 

While it is good to see stronger economic data coming through, the housing industry continues to fall into its own recession. This past week the average on a 30-year fixed rate mortgage came in at 7.08% according to Freddie Mac—a 20-year high. In their report, Freddie Mac economists said, "The 30-year fixed-rate mortgage broke seven percent for the first time since April 2002, leading to greater stagnation in the housing market. As inflation endures, consumers are seeing higher costs at every turn, causing further declines in consumer confidence this month. In fact, many potential homebuyers are choosing to wait and see where the housing market will end up, pushing demand and home prices further downward."

As expected, rising mortgage interest rates have caused a dramatic shift in the supply and demand dynamics in the mortgage world. In its Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time – relative to income – using data from MBA's Weekly Applications Survey (WAS), the Mortgage Bankers Association (MBA) reports that "the national median payment applied for by applicants increased 5.5 percent to $1,941 from $1,839 in August." 

Edward Seiler, the MBA's Associate Vice President of Housing Economics, noted that "Homebuyer affordability took an enormous hit in September, with the 75-basis-point jump in mortgage rates leading to the typical homebuyer's monthly payment rising $102 from August. With mortgage rates continuing to rise, the purchasing power of borrowers is shrinking. The median loan amount in September was $305,550 – much lower than the February peak of $340,000." 

That lack of affordability has affected mortgage application volume. The MBA's weekly application survey showed purchase applications down by 42% year-over-year. It is important to note that the MBA's survey data showed that Federal Housing Administration (FHA) loan applications increased week-over-week to 13.9% of total applications. FHA loans are typically preferred by first-time homebuyers as they allow for lower down payments. 

Keep in mind that your mortgage interest rate is determined by a lot of factors including your credit score, type of loan you're applying for and down payment to name a few. Your Movement Mortgage loan officer will be able to walk you through the process to see what you qualify for and what loan would be the best for your individual financial situation.