After taking a break from ongoing weekly increases, mortgage rates rose with a vengeance — increasing by the highest amount in more than a quarter century. But mortgage rates could tumble by next week’s report. Fifteen-year mortgages became much more attractive this week.
Freddie Mac reported Thursday in its Primary Mortgage Market Survey for the week ended June 27 that 30-year fixed-rate mortgages averaged 4.46 percent — the highest level since the week ended July 28, 2011.
It was the single largest increase for the 30 year since the week ended April 17, 1987, according to the secondary lender.
A week earlier, 30-year rates were 3.93 percent, while the year-earlier average was 3.66 percent.
“Following Fed chief Bernanke’s remarks on June 19th about the possible timing of reduced bond purchases, Treasury bond yields jumped over the week and mortgage rates followed,” Freddie Mac Chief Economist Frank Nothaft explained in the report. “He indicated that the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014.”
The Federal Housing Finance Agency, which regulates Freddie and its secondary cousin Fannie Mae, reported that 30-year mortgages on purchase-money transactions averaged 3.40 percent in May, down 15 basis points from April.
Mortgage Daily’s analysis of this week’s Treasury market activity indicates that the 30 year could be 8 BPS better in Freddie’s next survey.
The yield on the 10-year Treasury note averaged 2.57 percent during the period that Freddie surveyed primary lenders for this week’s report, while the 10-year yield closed at 2.49 percent Thursday, according to data from the Department of the Treasury.
No change in mortgage rates is expected over the next week or so by half of the panelists surveyed by Bankrate.com for the week June 27 to July 3. Thirty percent predicted a decline of at least 3 BPS, and just a fifth forecasted an increase.
The Mortgage Bankers Association predicts that 30-year mortgages will average 3.7 percent this quarter, 3.9 percent in the third quarter and 4.2 percent in the final three months of 2013.
The U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended June 21 indicated that jumbo mortgages were priced 28 BPS higher than conforming mortgages, off from 30 BPS in the previous report.
Fifteen-year fixed-rate mortgages averaged 3.50 percent in Freddie’s survey, up from 3.04 percent in the week ended June 20. The difference between 15-year loans and 30-year loans leapt to 96 BPS from the previous week’s 89 BPS.
A 29-basis-point rise for the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage left it at 3.08 percent in Freddie’s report.
Freddie said that the one-year Treasury-indexed ARM increased to 2.66 percent from 2.57 percent and was 2.74 percent in the week ended June 28, 2012.
The yield for the one-year Treasury note, which serves as the index for one-year ARMs, rose to 0.15 percent Thursday from 0.14 percent a week earlier, according to the Treasury Department data.
A one-basis-point rise from last week was reported by Bankrate.com for the six-month London Interbank Offered Rate, which was 0.42 percent as of Wednesday.
ARM share rose to 6.5 percent in latest Mortgage Market Index report from the previous week’s 6.0 percent.
