Interest rates on residential loans inched higher this past week, and the outlook — both short-term and long-term — is for further ascension thanks to inflation.
Fixed interest rates on 30-year mortgages averaged 4.42 percent in the week ended April 12, according to Freddie Mac’s Primary Mortgage Market Survey.
Long-term mortgage rates ascended 2 basis points from the preceding week and have shot up 34 BPS compared to the same-seven days last year.
Freddie Mac Deputy Chief Economist Len Kiefer said in the survey that a report this week from the Bureau of Labor Statistics indicated that the Consumer Price Index was up 2.4 percent in March from a year ago — the biggest year-over-year increase in 12 months.
“Rates could break out and head higher if inflation continues to firm,”
Kiefer explained.
The economist
added that two or three more Fed rate hikes are likely if inflation continues to trend higher.
In the short term, over the next week,
rates could rise another 4 BPS based on Mortgage Daily’s analysis of Treasury market activity.
But 79 percent of panelists surveyed by Bankrate.com for the week April 11 to April 17 expected no change in rates over the next week. A decline of at least 3 BPS was predicted by 14 percent, and just 7 percent expected an increase.
Jumbo interest rates were
10 BPS higher than conforming rates in the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended April 6. The jumbo-conforming spread widened from 6 BPS the prior week.
Freddie reported that
15-year fixed rates averaged 3.87 percent, unchanged from the week ended April 5. The spread between 15- and 30-year rates widened to 55 BPS from 53 BPS in the last report.
Five-year, Treasury-indexed, hybrid adjustable-rate mortgages averaged 3.61 percent in Freddie’s survey, a single basis point less than a week previous.
Treasury Department data indicate that the index for hybrid ARMs, the yield on the one-year Treasury note, closed Thursday at 2.11 percent, jumping 4 BPS over the last seven days.
At 2.47 percent as of Wednesday, the six-month London Interbank Offered Rate — which is also used as an index on some legacy ARMs — was up a single basis point from
the prior Wednesday, according to Bankrate.com. LIBOR is being retired in 2021.
Secured Overnight Financing Rates, which is replacing LIBOR, was reported by the Federal Reserve Board at 1.76 percent as of Wednesday. SOFR was 2 BPS higher than seven days earlier.
ARM share in the latest Mortgage Market Index report thinned to 14.6 percent from 17.8 percent a week earlier.
