Interest rates on residential loans were down for the second consecutive week -- with the latest improvement outpacing last week's decline. But market data suggest that mortgage rates might move higher.
At 3.43 percent in Freddie Mac's Primary Mortgage Market Survey for the week ended April 11, the average 30-year fixed-rate mortgage was 11 basis points better than a week earlier -- when rates were also lower. Compared to a year earlier, the 30 year was 45 BPS better.
Freddie Mac Chief Economist Frank Nothaft blamed a "lackluster employment report" for the decline in mortgage rates.
"The economy added just 88,000 net new jobs last month, about one-third as many as February and the fewest since June 2012," Nothaft stated in the report. "In addition, approximately 496,000 people left the workforce causing the unemployment rate to fall to 7.6 percent. Further, average hourly earnings were unchanged in March, indicating income growth remains tepid."
Mortgage rates are poised to be higher in Freddie's next survey based on a Mortgage Daily analysis of weekly Treasury market activity.
The yield on the 10-year Treasury note, which is a benchmark for mortgage rates, averaged 1.79 percent during the days that Freddie surveyed lenders for this week's report, according to data supplied by the Department of the Treasury. The 10-year yield closed at 1.82 percent Thursday.
But more than two-thirds of panelists surveyed by Bankrate.com for the week April 11 to April 17 predicted that rates won't move more than 2 BPS during the next week. A third forecasted a rise, and none expected rates to fall.
A 23-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 April 5. Jumbo pricing improved from a week earlier, when the jumbo-conforming spread was 27 BPS.
The 15-year fixed-rate mortgage averaged 2.65 percent in Freddie's survey, lower than 2.74 percent in the week ended April 4. The benefit of a 15-year mortgage diminished somewhat this week, with the spread between 15- and 30-year mortgages narrowing to 78 BPS from 80 BPS the previous week.
A 3-basis-point decline from last week left the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaging 2.62 percent in Freddie's survey.
Freddie reported the average one-year Treasury-indexed ARM at 2.62 percent this week, off from 2.63 percent a week prior. The one year averaged 2.80 percent in the week ended April 12, 2012.
The yield on the one-year Treasury note, which serves as the underlying index for the one-year ARM, closed Thursday at 0.12 percent, a basis point better than a week earlier, according to the Treasury Department data.
There was no week-over-week change in the six-month London Interbank Offered Rate, which Bankrate.com reported at 0.44 percent as of Wednesday.
More than 4.3 percent of activity in the latest Mortgage Market Index report was for ARMs, off from ARM share of 4.7 percent the previous week.