Weekly mortgage data released today didn’t yet reflect this week’s Treasury market rally. By next week’s reports, however, mortgage rates are likely plummet as a benchmark yield sinks to a new low.
Freddie Mac’s closely watched Primary Mortgage Market Survey showed that the average 30-year fixed-rate mortgage for the week ended Thursday matched the 4.09 percent record low set last week. The 30 year was 4.37 percent during this week last year.
But rates are set to tumble in next week’s reports based on the 10-year Treasury yield, which closed at 1.72 percent today — a whopping 37 BPS below the close last Thursday based on Department of the Treasury statistics.
Bankrate.com panelists surveyed for the week Sept. 22 to Sept. 28 also saw a drop in rates ahead, with 62 percent predicting a decline of at least 3 BPS during the next week. A quarter saw no changes ahead, and 13 percent projected an increase.
On a longer-term basis, Fannie Mae predicts that the 30 year will average 4.4 percent this quarter then fall to 4.2 percent in the fourth quarter. Next year’s average 30 year is forecasted at 4.3 percent.
Jumbo 30-year mortgages were priced 63 BPS higher than conforming loans as of last Friday’s Mortgage Market Index report from Mortech Inc. and MortgageDaily.com, wider than the 62-basis-point margin in the prior report.
Fixed-rate 15-year mortgages were 3.29 percent this week, 1 basis point lower than Freddie’s report seven days ago and a new record. The spread between the 15 year and 30 year was mildly wider at 80 BPS this week versus the previous week’s 79 BPS. The increasing premium for a 30-year mortgage makes the 15-year loan more attractive.
With a 3-basis-point rise over last week’s survey from Freddie, the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage turned in the worst weekly performance. The five-year averaged 3.02 percent in today’s report.
The one-year Treasury-indexed ARM was 1 basis point higher at 2.82 percent. The one-year ARM stood at 3.46 percent during this week in 2010. The one-year ARM index — the yield on the one-year Treasury — was unchanged from a week earlier at 0.10 percent today based on Treasury Department data.
Fannie’s outlook has the one-year averaging 2.9 percent during the entire second half of this year and 3.0 percent during 2012.
Reflecting the high level of anxiety about European financial institutions, the London Interbank Offered Rate climbed to 0.53 percent Wednesday from 0.50 percent a week earlier, Bankrate.com reported.
ARM share of last week’s loan inquiries slipped to 6.67 percent from 6.71 percent seven days prior, based on the Mortgage Market Index report.
The share of applications that will be for an ARM will fall from 6 percent this quarter to 4 percent in the final three months of this year. Next year’s ARM share is predicted to be 5 percent.
