Long-term fixed rates moved lower, while shorter term fixed rates didn’t move at all. It was a similar situation for adjustable-rate products. Rates could inch higher by the next report.
A 2-basis-point decline from last week left the fixed-rate, 30-year mortgage averaging 3.38 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Jan. 17. The 30 year was 50 basis points lower than during the same week in 2012.
Rates moved little as a result of tame inflation, according to Freddie’s chief economist, Frank Nothaft. The producer price index rose 0.1 percent between November and December, below the market consensus forecast, and the consumer price index was unchanged.
Mortgage rates could nudge higher in next week’s report based on Mortgage Daily’s analysis of this week’s Treasury market activity. Data from the Department of the Treasury indicate that the yield on the 10-year Treasury note averaged 1.86 percent during the period when Freddie surveyed lenders this week. The 10-year yield closed Thursday at 1.89 percent.
A majority of panelists surveyed by Bankrate.com for the week Jan. 17 to Jan. 23 predicted rates won’t move more than 2 BPS during the next week. More than a quarter predicted a decline, and less than a fifth see rates rising.
Freddie forecasts that the 30 year will average 3.4 percent this quarter and rise 10 BPS each quarter for the remainder of the year.
The American Bankers Association projects the 30 year to average 3.48 percent this quarter, 3.53 percent in the second quarter and 3.64 percent in the third quarter.
In a speech given at the University of Michigan, Federal Reserve Board Chairman Ben Bernanke said that the Fed will continue buying agency mortgage-backed securities because the economy is not out of the woods yet. The quantitative easing strategy has brought rates to the lowest levels on record.
Jumbo rates were locked in at an average of 33 BPS higher than conforming rates in the U.S. Mortgage Market Index report from Optimal Blue and Mortgage Daily for the week ended Jan. 11. The jumbo-conforming spread moved up from 31 BPS a week prior.
Freddie reported that the 15-year fixed-rate mortgage averaged 2.66 percent, unchanged from the week ended Jan. 10. The spread between 15- and 30-year loans narrowed to 72 BPS from the previous week’s 74 BPS.
At 2.67 percent, the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage was unchanged from a week earlier, according to Freddie.
The one-year Treasury-indexed ARM averaged 2.57 percent, better than 2.60 percent a week earlier and 2.74 percent a year earlier. Freddie’s forecast calls for the one year to average 2.7 percent in the first half of this year and 2.8 percent in the second half.
At 0.14 percent Thursday, the yield on the one-year Treasury note — which is used to determine rate and payment changes on one-year ARMs — was unchanged from a week earlier, according to Treasury Department data.
The six-month London Interbank Offered Rate slipped 1 basis point from last week to 0.49 percent as of Wednesday, according to Bankrate.com.
The latest Mortgage Market Index report indicated that ARM share increased to 3.4 percent from the previous week’s 3.0 percent.
ARM share will be 10 percent in the first quarter then increase by one percentage point each quarter for the rest of the year, according to Freddie.
