Interest rates on residential loans improved this week, and all signs point to further decreases by the time the next report is released.
A 3-basis-point decline from a week earlier left the 30-year fixed-rate mortgage averaging 3.54 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended April 4. A year earlier, the 30 year averaged 3.98 percent.
The decline in rates was accompanied by a slowing manufacturing industry, Freddie Mac Chief Economist Frank Nothaft said in the report.
Mortgage rates are poised to tumble in the next report based on a Mortgage Daily analysis of Treasury market activity.
During the period when Freddie surveyed lenders for this week’s report, the yield on the 10-year Treasury yield averaged 1.86 percent, according to data provided by the Department of the Treasury. The 10-year yield fell to 1.78 percent Thursday, suggesting an 8-basis-point decline by the time Freddie’s next survey is conducted.
A plurality of panelists surveyed by Bankrate.com for the week April 4 to April 10 agreed with Mortgage Daily’s forecast of lower interest rates, while 36 percent predicted rates won’t move more than 2 BPS over the next week and 18 percent projected that rates will rise.
Jumbo rate locks were priced at a 27-basis-point premium over conforming rate locks in the U.S. Mortgage Market Index report from Optimal Blue and Mortgage Daily for the week ended March 29. The jumbo-conforming spread was fatter than 15 BPS a week earlier.
Freddie reported a 2-basis-point decline from the week ended March 28 for the 15-year fixed-rate mortgage, which averaged 2.74 percent this week.
Borrowers on 15-year mortgages had a rate that was 80 BPS better than borrowers who opted for a 30-year mortgage. The spread narrowed from 81 BPS in the previous report.
Five-year, Treasury-indexed, adjustable-rate mortgages averaged 2.65 percent in Freddie’s survey, off from the prior week’s 2.68 percent.
At 2.63 percent, the one-year Treasury-indexed ARM was a basis point higher than in the previous report. The one year averaged 2.78 percent in the week ended April 5, 2012.
Interest rates and payments on one-year ARMs adjust based on movement in the underlying index:Â the yield on the one-year Treasury note. As of today, the one-year yield was 0.13 percent, slipping from 0.14 percent seven days earlier, according to the Treasury Department data.
The six-month London Interbank Offered Rate inched down to 0.44 percent Wednesday from 0.45 percent one week prior. LIBORÂ is used as the index on many subprime ARMs.
ARMs accounted for 4.7 percent of all rate-lock activity in the latest Mortgage Market Index report, up from the previous week’s 4.4 percent.
