Mortgage rates moved higher this past week thanks to a strong employment report. Jumbo mortgages lost some of their luster this week, while short-term loans were more competitive.
A seven-basis-point rise from seven days earlier left the 30-year fixed-rate mortgage averaging 3.42 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended May 9.
“Fixed mortgage rates edged up following a solid employment report for April.” Freddie Mac Chief Economist Frank Nothaft explained. “The economy gained 165,000 new jobs on net last month, more than the market consensus forecast and the largest monthly increase this year.”
The 30-year mortgage was 41 BPS better than the same week last year.
This week’s Treasury market activity points to no changes in 30-year mortgage rates in the next report. The yield on the benchmark 10-year Treasury note averaged 1.81 percent during the days that Freddie surveyed primary lenders for this week’s survey, according to data provided by the Department of the Treasury. The 10-year yield closed at 1.81 percent Thursday.
A majority of panelists surveyed by Bankrate.com for the week May 9 to May 15 agreed with Mortgage Daily’s analysis and predicted that mortgage rates won’t move more than 2 BPS during the next week. Just under a quarter each predicted either a rise or fall.
Jumbo borrowers paid an average of 33 BPS more than conforming borrowers in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended May 3. The jumbo-conforming spread widened from 32 BPS in the prior report.
Freddie reported that the average 15-year fixed-rate mortgage averaged 2.61 percent, climbing from 2.56 percent in the week ended May 2. The 15-year rate was 81 BPS lower than the 30-year mortgage, improving from the 79-basis-point spread in the previous report.
The five-year, Treasury-indexed, hybrid, adjustable-rate mortgage rose to 2.58 percent from 2.56 percent a week earlier, according to Freddie.
At 2.53 percent, Freddie said the one-year Treasury-indexed ARM averaged 3 BPS less than last week and 20 BPSÂ less than the week ended May 10, 2012.
The yield on the one-year Treasury note, which serves as the index on one-year ARMs, closed at 0.11 percent Thursday, the same as a week earlier, according to the Treasury data.
A less utilized index, the six-month London Interbank Offered Rate, was 0.43 percent as of Wednesday, unchanged from the prior Wednesday Bankrate.com reported.
ARMs accounted for 4.5 percent of all activity in the latest Mortgage Market Index, off from 4.9 percent one week earlier.
