Mortgage rates, which had been on a record-breaking streak, turned higher this week. Similar rates could be on the horizon unless Friday’s employment report surprises investors.
There was a 6-basis-point increase from last week for the 30-year fixed-rate mortgage, which averaged 3.55 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Aug. 2. The 30 year was 4.39 percent during this week last year.
Up until last week, the 30-year rate had either fallen or matched record-low levels during 13 out of the past 14 weeks.
Debt relief announced for the Eurozone along with mixed economic indicators buoyed Treasury yields and mortgage rates, according to Freddie’s chief economist, Frank Nothaft.
But the Federal Reserve Open Market Committee cast a pall over the market with a less than stellar assessment of the economy.
“Economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated,” an FOMC statement Wednesday said — adding that the housing sector remains depressed. But the Fed did highlight some strength in household spending and advancements in business spending.
The mostly downbeat outlook helped push the yield on the 10-year Treasury note down to 1.51 percent Wednesday, based on Department of the Treasury data. Given that the 10-year yield averaged 1.53 percent during the period when Freddie conducted its surveys for the latest report, mortgage rates aren’t likely to be much different in Freddie’s next report.
However, if the employment report to be released tomorrow by the Labor Department comes in strong, rates could rise with the stock market.
A plurality — 42 percent –of panelists surveyed by Bankrate.com for the week Aug. 2, to Aug. 8 predicted mortgage rates won’t move more than 2 BPS during the next week. A third forecasted an uptick, and a quarter expected a decline.
Jumbo borrowers paid a 77-basis point premium over conforming borrowers based on the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended July 27. The jumbo-conforming spread narrowed from 85 BPS in the prior report.
Freddie reported the average 15-year fixed-rate loan at 2.83 percent, up from 2.80 percent in the previous report. The more mild movement stretched the discount for a 15-year loan versus a 30-year mortgage to 72 BPS from the 69-basis-point spread the previous week.
A one-basis-point increase over the prior seven days put the five-year, Treasury-indexed, adjustable-rate mortgage at 2.75 percent in Freddie survey.
But the one-year Treasury-indexed ARM managed to fall to 2.70 percent from 2.71 percent in the previous report and 3.02 percent in the same week the previous year.
One-year ARM adjustments can be expected to be a little more favorable for borrowers based on the one-year Treasury yield, which fell to 0.17 percent today from 0.18 percent last Thursday, according to the Treasury Department.
The six-month London Interbank Offered Rate remained unchanged at 0.73 percent, according to Bankrate.com
ARM activity slowed in the Mortgage Market Index report by 8 percent from the prior week, while ARM share fell to 2.9 percent from 3.2 percent.
