Interest rates on single-family loans turned sharply higher this past week as the Federal Reserve raised rates. But at least one forecast has a slight dip in the week ahead.
Thirty-year fixed rates on residential loans averaged 4.62 percent in the week ended June 14, according to Freddie Mac’s Primary Mortgage Market Survey.
Compared to the preceding seven-day period, the 30 year was 8 basis points worse. The average has soared 71 BPS since the same-seven days last year.
Freddie noted that it was the second-highest level this year for mortgage rates.
“The Federal Reserve Board on Wednesday raised the federal funds rate by 25 basis points,” Freddie Mac Chief Economist Sam Khater said in the report. “The good news is that the impact on consumer budgets will be smaller than past rate hike cycles. That is because a much smaller segment of mortgage loans in today’s market are pegged to short-term rate movements. The adjustable rate mortgage share of outstanding loans is a lot smaller now — 8 percent versus 31 percent — than during the Fed’s last round of tightening between 2004 and 2006.”
Mortgage Daily’s analysis of Treasury market activity suggests fixed rates could be around 3 basis points lower in next week’s survey.
But a plurality of panelists surveyed by Bankrate.com for the week June 13 to June 19 disagreed with Mortgage Daily’s forecast and predicted rates will rise at least 3 BPS. The remaining 54 percent were evenly split over whether rates would stay where they are or decline.
The U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended June 8 indicated that jumbo rates were 12 BPS higher than conforming rates. The spread was just 2 BPS a week previous.
Freddie’s survey indicated that 15-year fixed rates averaged 4.07 percent, climbing 6 BPS from the week ended June 7, 2018. The spread between long- and short-term rates widened to 55 BPS from 53 BPS in last week’s report.
A 9-basis-point surge left the average on five-year, Treasury-indexed, hybrid adjustable-rate mortgages at 3.83 percent in Freddie’s latest survey.
The Department of the Treasury reported that the yield on the one-year Treasury note, which determines rate changes on hybrid ARMS, closed Thursday at 2.35 percent, climbing from 2.31 percent the previous Thursday.
Bankrate.com reported that the six-month London Interbank Offered Rate, a less-utilized ARM index, was 2.50 percent as of Wednesday. LIBOR rose from 2.48 percent seven days earlier.
The Federal Reserve Bank of New York reported that the Secured Overnight Financing Rate, which is replacing LIBOR, declined to 1.71 percent yesterday from 1.73 percent the preceding Wednesday.
ARM share in the most-recent Mortgage Market Index report was 14.6 percent, the same as the previous week.
