Mortgage rates bounced off their record lows but could be better in next week’s report. The spread between shorter- and longer-term loans widened this week, making shorter terms more attractive.
After falling to an all-time low of 3.36 percent last week, 30-year fixed-rate mortgages averaged 3.39 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Oct. 11. But interest rates remain well below a year ago, when the 30-year averaged 4.12 percent.
Mortgage rates could retreat by 3 basis points in next week’s report based on an analysis of Treasury market activity. The 10-year Treasury yield averaged 1.73 percent during the period when Freddie surveyed lenders for this week’s report, according to data reported by the Department of the Treasury. But the 10-year yield fell to 1.70 percent Thursday.
More than two thirds of the panelists surveyed by Bankrate.com for the week Oct. 11 to Oct. 17, however, don’t see any changes ahead for mortgage rates. Rates will rise at least 3 BPS over the next week, according to a fifth of the panel, while 13 percent forecasted a decline.
Prospective borrowers who inquired about a jumbo mortgage were quoted a rate with an average premium of 78 BPS over conforming rates in the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended Oct. 5. The jumbo-conforming spread deteriorated from 73 BPS a week earlier.
A one-basis-point increase was reported by Freddie for the average 15-year fixed-rate mortgage, which came in at 2.70 percent. The price break for 15-year loans improved, widening to 69 BPS versus the 67-basis-point discount from average 30-year rates registered last week.
Also increasing a single basis point from last week was the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage, which Freddie reported at 2.73 percent.
The one-year Treasury-indexed ARM increased 2 BPS from last week to 2.59 percent in Freddie’s survey. One-year ARMs averaged 2.90 percent in the same week during 2011.
There was no change over the past week for the yield on the one-year Treasury note, which was 0.18 percent as of Thursday, according to the Treasury Department.
The six-month London Interbank Offered Rate was 0.62 percent as of Wednesday, according to Bankrate.com. LIBOR, which like the one-year Treasury yield is used as an ARM index, was 0.63 percent a week prior.
ARM inquiries accounted for 2.4 percent of all inquiries in the latest Mortgage Market Index report, off from 2.6 percent the previous week.
