Fixed rates were higher this week, as was the one-year adjustable-rate mortgage. But it was a different story for the five-year hybrid ARM.
The 30-year fixed-rate mortgage averaged 3.90 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended April 19. The 30 year inched up from 3.88 percent last week. But the 30 year remains settled well below the 4.80 percent average a year ago.
Freddie Mac Chief Economist Frank Nothaft said fixed rates didn’t move amid signs that inflation remained in check.
The 30-year mortgage has the potential to decrease 3 BPS by next week’s report based on an analysis of Treasury market activity. The 10-year Treasury yield averaged 2.01 percent during the period when Freddie last surveyed its 125 lenders based on quotes from the Department of the Treasury, while the 10-year yield closed today at 1.98 percent.
A majority of panelists surveyed by Bankrate.com for the week April 19 to April 25 predicted that mortgage rates won’t move more than 2 BPS during the next week. But 31 percent forecasted an increase and just 6 percent expected a decline.
Freddie’s government-controlled rival, Fannie Mae, forecasted that the 30 year will average 4.1 percent this quarter then spend the second half of the year at 4.2 percent.
But the Mortgage Bankers Association has a more aggressive forecast, with the 30-year mortgage moving from 4.1 percent this quarter to 4.3 percent in the third quarter. MBA sees the 30 year rising each quarter through the end of next year when it reaches 5.0 percent.
Jumbo mortgage inquiries were priced 56 BPS higher than conforming mortgages in the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended April 13. The jumbo-conforming spread eased from 57 BPS in the prior report.
Freddie reported the average 15-year fixed-rate mortgage at 3.13 percent, also 2 basis points higher than seven days prior. The 15-year average was discounted by 77 BPS over the 30 year, the same as in the previous report.
At 2.78 percent, the five-year, Treasury-indexed, hybrid ARM was 7 BPS below last week’s reading from Freddie.
The one-year Treasury-indexed ARM was 1 basis point higher than last week at 2.81 percent in Freddie’s report this week. The one year averaged 3.16 percent during this week last year.
Fannie has the one-year ARM at 2.9 percent in the second quarter and 3.0 percent in the second half.
ARM borrowers depend on the one-year Treasury note yield for changes to their rates, and the one-year yield fell to 0.17 percent as of Thursday from 0.18 percent the previous Thursday, according to Treasury Department data.
The yield on the six-month London Interbank Offered Rate inched up to 0.74 percent yesterday from 0.73 percent last Wednesday, according to Bankrate.com.
ARM share of pricing inquiries in the most-recent Mortgage Market Index report was 4.34 percent, slightly lower than 4.36 percent in the previous report.
Fannie predicts that ARM share will be 7 percent in the second and third quarters then ease to 6 percent in the fourth quarter.
MBA has ARM share of mortgage production at 5 percent this quarter and 6 percent in the second half.
