Fixed mortgage rates fell to a new low this week and could hold their positions until next week’s reports. On the other hand, adjustable-rate mortgages climbed higher, while jumbo mortgages and 15-year loans became less competitively priced.
Another new low was established for the fixed-rate 30-year mortgage, which Freddie Mac said averaged 3.49 percent in its Primary Mortgage Market Survey for the week ended July 26. The 30 year was a record-low 3.53 percent in the prior report and 4.55 percent in the same week during the prior year.
“Market concerns over the strength of the economic recovery brought long-term Treasury yields to new lows this week allowing fixed mortgage rates to reach record levels,” explained Frank Nothaft, Freddie’s chief economist, in the report. “The Conference Board Leading Economic Index showed the largest monthly decline in June since September 2011. Existing home sales fell to 4.36 million homes (annualized) in June and represented the slowest pace since October 2011. Similarly, new home sales fell in June to their lowest level since January of this year.”
On just purchase financing, Freddie’s conservator — the Federal Housing Finance Agency — reported that 30-year fixed-rate mortgages averaged 3.88 percent during the last week of June, down 16 BPS from the final week of May.
Not much difference can be expected for the 30-year mortgage in Freddie’s next survey based on an analysis of Treasury market activity. The yield on the benchmark 10-year Treasury note averaged 1.45 percent during the days that Freddie surveyed its 125 lenders for this week’s report — the same as it closed at today based on data released by the Department of the Treasury.
The 10-year Treasury yield fell to its lowest level on record Wednesday:Â 1.43 percent.
Half of Bankrate.com’s panelist for the week July 26 to Aug. 1 agreed that rates won’t move during the next week or so, while the other half predicted that rates will decline at least 3 BPS.
Fannie Mae predicts that the 30-year mortgage will average 3.8 percent this quarter, in the fourth quarter and in the first-quarter 2013.
The outlook from the Mortgage Bankers Association, however, has the 30 year averaging 3.7 percent this quarter and 3.8 percent in the final three months of this year.
Jumbo borrowers didn’t get as good of a break on rates recently as borrowers whose loans didn’t exceed $417,000. The jumbo-conforming spread rose to 85 BPS in the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended July 20 from the prior week’s 81-basis-point spread.
Also falling to a level it has never seen before was the 15-year fixed-rate mortgage, which averaged 2.80 percent in Freddie’s report versus 2.83 percent a week ago. The 15 year was a slightly less attractive option this week, as it was only discounted 69 basis points from the 30-year mortgage compared to a 70-basis-point discount in the week ended July19.
A 5-basis-point increase from last week was reported by Freddie for the five-year, Treasury-indexed ARM, which averaged 2.74 percent in the latest survey.
Also higher was the one-year Treasury-indexed ARM, which averaged 2.71 percent in Freddie’s survey versus 2.69 percent a week earlier. But the one year was lower than 2.95 percent 12 months ago.
The one-year ARM will average 2.8 percent each quarter of 2012 and during the first-half 2013, according to Fannie’s forecast.
One-year ARM borrowers’ rates are adjusted based on the one-year Treasury note yield, which increased to 0.18 percent today from 0.17 percent last Thursday based on Treasury Department data.
There was no change from a week prior in the six-month London Interbank Offered Rate, which Bankrate.com reported at 0.73 percent as of Wednesday.
The share of overall pricing inquiries in the latest Mortgage Market Index report that were for ARMs rose to 3.23 percent from 2.88 percent a week earlier.
Fannie projects that ARM share of originations will be 7 percent in the last two quarters of this year and 8 percent in the first three quarter of next year. MBA predicts that ARM share will be 6 percent for the rest of 2012 and the first-quarter 2013.
