Fixed mortgage rates slipped this week and stand barely above the record lows reached less than two months ago. But interest rates are likely to be 10 basis points higher by the time the next report comes out.
At an average of 3.34 percent in Freddie Mac's Primary Mortgage Market Survey for the week ended Jan. 3, the 30-year fixed-rate mortgage was within 3 basis points of its all-time low reached the week ended Nov. 21.
A week earlier, the 30 year averaged 3.35 percent, while the average was 3.91 percent a year earlier.
Mortgage rates are poised to jump in Freddie's next report based on a Mortgage Daily analysis of Treasury market activity.
During the days that Freddie surveyed lenders for this week's report, the yield on the 10-year Treasury averaged 1.82 percent, according to data reported by the Department of the Treasury. But, thanks mostly to a 'fiscal cliff' deal that sent stock prices soaring, the 10-year yield jumped to 1.92 percent as of today's close.
But weak employment numbers -- such as an increase of less than 125,000 in nonfarm payrolls or an unemployment rate above 8 percent -- in tomorrow's report from the Department of Labor could place downward pressure on mortgage rates.
A majority of panelists surveyed by Bankrate.com for the week Jan. 3 through Jan. 9 agreed that mortgage rates will increase. But more than a quarter predicted a decline, and nearly a fifth don't see mortgage rates moving more than 2 BPS over the next week or so.
Jumbo mortgages were priced at a 31-basis-point premium over conforming loans in the U.S. Mortgage Market Index from Optimal Blue and Mortgage Daily for the week ended Dec. 28. The jumbo-conforming spread narrowed from 34 BPS in the prior report.
Freddie reported the average 15-year fixed-rate mortgage at 2.64 percent, 1 basis point less than the week ended Dec. 27, 2012. Borrowers who opted for a 15-year mortgage had an average rate that was 70 BPS better than on 30-year loans, the same spread as last week.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages moved up a basis point from a week earlier to average 2.71 percent in Freddie's survey.
It was the same story for the Treasury-indexed, one-year ARM, which averaged 2.57 percent this week and 2.56 percent last week. The one year averaged 2.80 percent in the week ended Jan. 5, 2012.
The yield on the one-year Treasury note, which determines rate and payment adjustments on one-year ARMs, closed at 0.15 percent Thursday, according to the Treasury Department. The 10-year yield was unchanged from a week prior.
The six-month London Interbank Offered Rate, which is also utilized as an ARM index, was 0.51 percent as of Wednesday, according to Bankrate.com. LIBOR was unchanged from seven days earlier.
Just 2.5 percent of all rate locks reflected in the latest Mortgage Market Index report from were for ARMs. A week prior, ARM share was 3.5 percent.