There was no movement with fixed rates this week. Yet 30-year mortgages sit at their lowest level ever recorded. But fixed-rates are likely to be higher in next week’s report. Borrowers who have a one-year adjustable-rate mortgage can expect their payments to start moving higher based on an increase in the one-year index.
For three weeks now the 30-year fixed-rate mortgage has averaged less than at any other time on record.
Freddie Mac reported in its survey of 125 mortgage lenders for the week ended Feb. 16 that the 30 year averaged 3.87 percent, the same as last week. A year ago, the 30 year was at 5.00 percent.
Frank Nothaft, Freddie’s chief economist, explained that an improvement in the National Federation of Independent Business index during January was offset by a February decline in the Reuters/University of Michigan index of consumer sentiment.
The 30-year mortgage could be around 4 basis points higher in Freddie’s next survey based on an analysis of Treasury market data. During the three days that Freddie surveyed lenders this week, the 10-year yield averaged 1.95 percent, according to data provided by the Department of the Treasury. Today, the 10-year yield closed at 1.99 percent.
But a majority of panelists surveyed by Bankrate.com for the week Feb. 16 to Feb. 22 disagreed with the prediction that rates will rise and instead see no changes ahead. Another 38 percent forecasted an increase of at least 3 BPS, while 8 percent projected a decline.
Consumers who inquired about jumbo mortgages were quoted rates that were an average of 61 BPSÂ higher than conforming loans, according to the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended Feb. 10. The jumbo-conforming spread improved from 62 BPS in the prior report.
There was no week-over-week change in the average 15-year mortgage, which Freddie reported at 3.16 percent. There was also no change in the spread between 15-year and 30-year mortgages, with the 15 year priced 71 basis points lower than the 30 year.
The five-year, Treasury-indexed, hybrid ARM managed a 1-basis-point decline over last week to land at 2.82 percent in Freddie’s survey.
But the one-year Treasury-indexed ARM jumped 6 BPS to 2.84 percent, according to Freddie. The one-year was 55 BPS higher during the same week last year.
One-year ARM borrowers can expect to see an upward adjustment in their payments based on the yield on the one-year Treasury. The index closed at 0.17 percent today, higher than 0.15 percent a week ago and 0.10 a month ago, the Treasury Department reported.
Another ARMÂ index, the six-month London Interbank Offered Rate, fell to 0.75 percent Wednesday from 0.77 percent a week earlier, according to Bankrate.com. LIBORÂ is used to determine rate changes for many subprime ARMs.
ARM share climbed to 4.75 percent from the previous week’s 4.31 percent in the Mortgage Market Index report.
