Mortgage rates deteriorated this past week, and last week’s solid jobs report ensures that further increases are ahead. Adjustable-rate mortgage indices saw disparate movement.
A 6-basis-point ascension from one week previous left 30-year fixed rates on single-family loans at 4.60 percent in the seven days that concluded on Sept. 13.
That was according to Freddie Mac’s Primary Mortgage Market Survey, which indicated that long-term interest rates were also higher than 3.78 percent in the same week last year.
Sam
Khater, Freddie’s chief economist, said strong employment and consumer credit growth were behind the increase.
“Overall, this spectacular stretch of solid job gains and low unemployment should help keep homebuyer interest elevated,” Khater said. “However, mortgage rates will likely also move up, as the Federal Reserve considers short-term rate hikes this month and at future meetings.”
Curt Long, the chief economist for the National Association of Federally Insured Credit Unions, said in a statement that last week’s jobs report will keep the Federal Reserve on course for two more rate hikes this year.
“The big news from the August jobs report was the up tick in wage growth, which hit its high-water mark of the recovery at 2.9 percent,” Long said. “While that is a welcome development for workers, it is still only enough to offset inflation. The headline unemployment rate held at 3.9 percent as the labor force shrunk. However, broader measures of labor utilization continue to improve, suggesting that the labor market is tightening.”
Mortgage rates are unlikely to be much different in next week’s report based on Mortgage Daily’s analysis of Treasury market activity.
But a majority of panelists surveyed by Bankrate.com for the week Sept. 12 to Sept. 18 predicted that rates will increase at least 3 BPS over the next week. A quarter predicted a decline, and just 17 percent agreed with Mortgage Daily’s forecast and projected no change.
In the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Sept 7, jumbo rates were 9 BPS higher than conforming rates, less than the 11-basis-ponit spread the prior week.
Freddie’s survey had 15-year fixed rates rising to 4.06 percent from 3.99 percent. Fifteen-year rates were 54 BPS lower than 30-year rates, down from a 55-basis-point spread in the week ended Sept. 6, 2018.
At 3.93 percent, rates on five-year, Treasury-indexed, hybrid ARMs were the same as in last week’s report.
Data from the Department of the Treasury indicate that the yield on the one-year Treasury note — which is used to determine rate changes on hybrid ARMs — rose to 2.55 percent Thursday from 2.50 percent the preceding Thursday.
The six-month London Interbank Offered Rate was reported by the Wall Street Journal at 2.56 percent as of Wednesday, 2 BPS higher than seven days earlier.
LIBOR, which is used for some legacy ARMs, is being replaced by the Secured Overnight Financing Rate — which was reported by the Federal Reserve Bank of New York at 1.94 percent as of Wednesday, off a basis point from the previous Wednesday.
ARM share in the latest Mortgage Market Index report was 16.5 percent, thinning from 17.6 percent in the week ended Aug. 31.
