Fixed mortgage rates haven’t budged over the past week, and the short-term outlook is for more of the same. But the long-term outlook is for rates to climb.
For the second consecutive week, there was no movement in the 30-year mortgage rate. Freddie Mac reported in its Primary Mortgage Market Survey for the week ended Feb. 14 that 30-year fixed rates averaged 3.53 percent.
But the 30 year has improved from the same week last year, when the average came in at 3.87 percent.
Mortgage rates are likely to remain stuck at their current levels over the next week based on a Mortgage Daily analysis of this week’s Treasury Market activity. The yield on the 10-year Treasury note averaged 2.02 percent during the days that Freddie surveyed lenders for the latest report, while the yield closed at 2.00 percent Thursday, according to data from the Department of the Treasury.
A majority of panelists surveyed by Bankrate.com for the week Feb. 14 to Feb. 20 came to the same conclusion, while nearly a third predicted rates will decline at least 3 basis points and 15 percent forecasted an increase.
Freddie projects that 30-year mortgage rates will climb to 3.8 percent by the third quarter and 4.0 percent by the fourth quarter.
A 22-basis-point premium was being charged for jumbo mortgages in the U.S. Mortgage Market Index report from Optimal Blue and Mortgage Daily for the week ended Feb. 8, an improvement from 25 BPS in the prior report.
Freddie said that the average 15-year, fixed-rate mortgage was also unchanged from the week ended Feb. 7 at 2.77 percent. At 76 BPS, the spread between 15- and 30-year mortgages was additionally unchanged from seven days earlier.
The five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaged 2.64 percent in Freddie’s latest survey, 1 basis point higher than last week.
An 8-basis-point increase from last week was recorded for the one-year Treasury-indexed ARM, which averaged 2.61 percent in Freddie’s report. The one year was down, however, from 2.84 percent in the week ended Feb. 16, 2012.
Freddie’s forecast is for the one year to be 2.6 percent in the third quarter and 2.4 percent in the fourth quarter.
Treasury Department data indicate that the index for the one-year ARM — the yield on the one-year Treasury note — closed at 0.16 percent today, up from 0.15 percent seven days earlier.
The yield on the six-month London Interbank Offered Rate, which is also used as an index to determine rate changes on ARMS, was unchanged from a week earlier at 0.47 percent as of Wednesday, according to Bankrate.com.
The latest Mortgage Market Index report indicated that ARMÂ share slipped to 4.4 percent of all rate locks from the previous week’s 4.8 percent.
ARM share of mortgage originations will be 10 percent this quarter, according to Freddie’s outlook, then rise 1 percentage point each quarter through the middle of next year.
