Weekly Mortgage Market Update: Raleigh Home Loan Rates
Mortgage-backed securities faced sustained pressure this week as economic data consistently pointed to firmer growth, sticky producer-level inflation, and resilient labor conditions. While mortgage rates did not spike sharply, the underlying bond market tone shifted to more defensive, causing lenders to adjust mortgage rates higher over the course of the week.
This was not a headline-driven week. Instead, the mortgage market reacted to a steady accumulation of reports that reinforced a higher-for-longer environment for yields.
Strong Business Investment Set the Tone Early
The week opened with a notable surprise in durable goods data. Headline orders surged 5.3 percent for November, far exceeding expectations and reversing the prior month’s decline. Core capital goods orders also rose 0.7 percent, signaling renewed business investment momentum.
For bond markets, this matters. Strong capital spending implies confidence in future demand and productivity. That confidence reduces the appeal of long-duration fixed-income assets like Treasuries and mortgage-backed securities. As a result, MBS prices softened early in the week, and yields drifted higher.
Treasury auctions for two-year and five-year notes added supply pressure. While demand was adequate, it was not strong enough to counteract the growth narrative forming from the data. Mortgage-backed securities followed Treasuries lower.
Consumer Confidence Softened but Did Not Offset Growth Signals
Tuesday’s data offered some balance, but not enough to reverse market direction.
ADP employment showed modest job growth of 7.75K, continuing a trend of slower hiring. Normally, that would support bonds. However, housing price data surprised to the upside. FHFA home prices rose 0.6 percent month over month and nearly 2 percent year over year. Case-Shiller also showed stable pricing.
Home prices feed directly into shelter inflation expectations. When prices stabilize or rise, it limits how quickly inflation can fall. That dynamic kept pressure on MBS despite softer labor growth.
Consumer confidence dropped sharply to 84.5, well below expectations. While weaker sentiment can signal slowing demand, markets viewed this as caution rather than contraction. Mortgage-backed securities saw little benefit from the report.
Mortgage Demand Pulled Back After Prior Surge
Wednesday’s MBA data showed a cooling in mortgage demand following the prior week’s surge. Purchase applications dipped slightly to 193.3, while refinance activity fell more meaningfully from recent highs.
This pullback did not signal a breakdown in demand. It reflected borrower sensitivity after recent rate volatility. From a market perspective, lower application volume reduces one source of technical support for MBS, making prices more vulnerable to broader bond market moves.
Crude oil inventories showed a drawdown, pushing energy prices higher. Rising energy costs feed into producer inflation expectations and reinforced the cautious tone in fixed-income markets.
Federal Reserve Meeting Reinforced the Status Quo
Wednesday afternoon delivered the week’s most anticipated event. The Federal Reserve held the policy rate steady at 3.75 percent, as expected. The accompanying statement and press conference emphasized patience and data dependence.
Markets took the message as neutral to slightly firm. There was no indication of imminent easing, and no urgency to counter recent economic strength. Mortgage-backed securities remained under pressure following the announcement, though the reaction was orderly rather than abrupt.
Inflation at the Producer Level Reaccelerated
Thursday and Friday delivered the most rate-relevant data of the week.
Core PPI rose 0.7 percent month over month and 3.3 percent year over year, both well above expectations. Headline PPI also surprised higher. Producer inflation tends to lead consumer inflation. When costs rise at the production level, markets assume some portion will flow through to consumers.
This data confirmed that inflation progress remains uneven. While consumer inflation has cooled, upstream pricing pressure persists. That combination is unfriendly for mortgage-backed securities and helps explain why rates edged higher into the week’s end.
Chicago PMI also surged to 54, signaling expansion in regional manufacturing activity. This further reinforced the theme of economic resilience.
Labor Market Data Remained Tight Enough to Matter
Weekly jobless claims increased slightly to 209K but remained historically low. Continued claims declined to 1.83 million. Productivity data showed strong gains, while unit labor costs fell sharply.
Higher productivity helps offset wage inflation, but the overall labor picture remains tight enough to support consumer spending. Bond markets interpreted this as another reason the Federal Reserve can afford to remain patient.
Mortgage-backed securities did not find relief from labor data this week.
Why Mortgage-Backed Securities Struggled This Week
Several forces combined to pressure MBS pricing:
- Strong business investment and factory data reinforced economic momentum.
- Producer inflation accelerated, raising concerns about future CPI.
- Treasury auctions added steady supply pressure.
- Housing prices stabilized, limiting disinflation hopes.
- The Fed reaffirmed a wait-and-see posture.
Together, these factors pushed mortgage rates modestly higher without triggering a sharp sell-off.
What to Watch Next Week and Why It Matters
Next week brings one of the most important data slates of the quarter.
Manufacturing data from ISM and S&P Global will shape growth expectations early in the week. Job openings and quits data will offer insight into labor demand.
Services data midweek will be critical, as services inflation remains the Fed’s primary concern.
Friday’s jobs report is the main event. Payroll growth, wage inflation, and the unemployment rate will heavily influence Treasury yields and mortgage-backed securities. Strong labor data would pressure rates higher. Weaker data would support a rally.
Treasury auctions throughout the week will also play a role, particularly the longer maturities.
What This Means for Borrowers Across North Carolina
Mortgage rates moved higher this week because markets responded to stronger growth and persistent inflation pressure, not because of any single headline. Rates remain well below late-2024 levels, but volatility has returned.
For homebuyers and homeowners across Raleigh, Cary, Apex, Durham, and the Triangle, strategy matters more than prediction: Interest Rate Lock Timing, Loan Structure, and Execution all matter in this environment.
Certified Home Loans works with North Carolina borrowers to navigate changing market conditions with clarity and precision. Whether you are exploring Conventional, FHA, VA, or Jumbo financing, our Raleigh Mortgage Team focuses on real data, local expertise, and long-term outcomes as market conditions continue to evolve.
