Mortgage rates increased this week, and it looks like an even bigger leap is in store for next week’s report. The good news is that the economy is improving.
A 4-basis-point week-over-week rise was recorded by Freddie Mac for the average 30-year, fixed-rate mortgage, which was 3.92 percent in the Primary Mortgage Market Survey for the week ended March 15. The 30 year was 4.76 percent during this week last year.
Treasury market activity points to another 13-basis-point or so rise in next week’s report. The 10-year yield averaged 2.16 during the period that Freddie surveyed its 125 lenders this week, while the 10-year yield closed at 2.29 percent today, according to data released by the Department of the Treasury.
An overwhelming majority — 79 percent — of panelists surveyed by Bankrate.com agreed with that analysis. But 21 percent predicted that rates won’t move more than 2 BPS during the next week. None of the panelists forecasted a decline.
Helping to drive bond yields and mortgage rates up were a deal worked out for Greek bonds and a strengthening U.S. economy.
“An upbeat employment report for February caused U.S. Treasury bond yields to increase over the week and mortgage rates followed,” Freddie Mac Chief Economist Frank Nothaft explained in the report. “The economy gained 227,000 jobs, above the market consensus forecast, and revisions added another 61,000 to January and December. Job growth over the last six months was the strongest since 2006.
“In addition, the Federal Reserve’s March 13th policy committee announcement noted that it anticipates the unemployment rate will decline gradually toward levels that it judges to be consistent with its mandate to achieve maximum employment with stable prices and moderate long-term interest rates”
Jumbo loans were priced 59 BPS higher than conforming mortgages in the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended March 9. The jumbo-conforming spread was trimmed from 60 BPS in the previous report.
Freddie said that the 15-year mortgage edged up 3 BPS from last week to 3.16 percent. Fifteen-year rates were priced at a 76-basis-point discount compared to 30-year mortgages, a little better than the 75-basis-point spread a week earlier.
The five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaged 2.83 percent in Freddie’s survey, up from 2.81 percent in the previous report.
The one-year Treasury-indexed ARM climbed to 2.79 percent from 2.73 percent but was down from 3.17 percent in Freddie’s survey for the week ended March 17, 2011.
Things look worse for one-year ARM borrowers, with the underlying one-year Treasury yield climbing to 0.21 percent from 0.18 percent last Thursday based on the Treasury Department data.
Another ARM index, the six-month London Interbank Offered Rate — or LIBOR — was 0.74 percent as of Wednesday, the same as a week prior, Bankrate.com reported.
The National Monthly Median Cost of Funds Ratio for thrifts closed out last year at 1.16 percent, down from 1.20 percent in November, the Office of the Comptroller of the Currency reported.
The OCC also said that the fourth-quarter 2011 Quarterly Average Cost of Funds for thrifts fell to 1.04 percent from the third quarter’s 1.14 percent.
ARM share slipped to 4.39 percent in the latest Mortgage Market Index report from 4.68 percent in the prior report.
