Mortgage rates moved within a narrow range this past week but will likely be higher in next week’s reports. One forecast has fixed rates nearly 100 basis points higher by next year.
Up 3 BPS for the week ended Thursday, the average 30-year fixed-rate mortgage was 4.74 percent in Freddie Mac’s survey of 125 mortgage lenders. The 30-year was 4.99 percent in the same week last year.
Fannie Mae, in its latest housing forecast, has the 30-year at 4.9 percent this quarter then rising at least 10 BPS each quarter until the end of 2012 — when it is expected to reach 5.7 percent.
The American Bankers Association issued its own forecast calling for conventional mortgage rates to average 4.80 percent during the first quarter then climb to 5.29 percent by the fourth quarter.
Mortgage rates will be at least 10 BPS higher in next week’s reports based on the 10-year Treasury yield, which jumped to 3.47 percent today from just 3.34 percent last Thursday, based in data from the Treasury Department.
The majority of Bankrate.com panelists for the week Jan. 20 to Jan. 26 predicted that rates will remain within 2 BPS of their current levels during the next week, while 28 percent foresaw an increase and 11 percent forecasted a decline.
The conforming 30-year in the Mortech-Mortgage Daily Mortgage Market Index report for the week ended Wednesday was 3 BPS lower than last week, while the jumbo saw a 5-basis-point decline — cutting the jumbo-conforming spread to 72 BPS from 74 BPS seven days prior.
Unlike the 30-year in Freddie’s report, the 15-year fell 3 BPS from last week to 4.05 percent.
Like the 15-year, Freddie said the five-year adjustable-rate mortgage retreated. The hybrid ARM, which is indexed to the one-year Treasury, fell to 3.69 percent from 3.72 percent seven days ago.
At 3.25 percent, the one-year Treasury-indexed ARM was 2 BPS higher than a week earlier but 107 BPSÂ better than the same week last year. The one year will average 3.5 percent during the first quarter, according to Fannie’s forecast, then steadily rise to 4.3 percent by the end of next year.
The underlying yield on the one-year Treasury was up 1 basis point from last week to close at 0.27 percent today, based on Treasury Department data. A less-common ARM index, the six-month LIBOR, was unchanged from last week at 0.46 percent, according to Bankrate.com.
ARMs accounted for 5.0 percent of activity in the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Jan. 14, a tad higher than 4.9 percent the previous week.
ARM share will be 8 percent this quarter, Fannie predicted, then climb to 14 percent by the end of this year and 18 percent by the end of next year.
New loan activity eased, with the Mortgage Market Index slipping to 209 from the prior week’s 223. Refinances accounted for 51 percent of business versus 53 percent last week. The latest rate-term refinance share was 37 percent, and the cashout refinance share was 15 percent.
In MBA’s report, last week’s refinance share rose to 73 percent from 72 percent the week before.
Fannie projected that refinance share based on originations will be 59 percent this quarter then slide to 29 percent by the end of the year.
