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Mortgage Rate News | Mortgage Market Index | ARM indices | ARM Statistics
Average fixed and ARM rates. Rate forecasts. Quotes on ARM indexes including COFI, MTA, LIBOR & Treasuries. Rate reset studies and reports. Mortgage rate litigation.

Mortgage Rates at 11-Month High, Could Rise More

Expectations about Fed moves drive increase

Feb. 1, 2018

By SAM GARCIA Mortgage Daily

portrait of Sam Garcia

Mortgage rates moved to an 11-month high this past week thanks to expectations about Federal Reserve rate hikes. Some signs point to another increase in mortgage rates over the next week.

Thirty-year fixed interest rates on single-family loans averaged 4.22 percent in the seven days that concluded on Feb. 1, according to Freddie Mac's Primary Mortgage Market Survey.

The last time that long-term mortgage rates were that high was in the week ended March 23, 2017, when Freddie reported the 30 year at 4.23 percent.

The average deteriorated by 7 basis points from one week earlier. Compared to the same-seven days last year, 30-year fixed rates were up 3 BPS.

"The Federal Reserve did not hike rates this week, but the market views future hikes as a near certainty," Freddie Mac Deputy Chief Economist Len Kiefer said in the report. "The expectation of future Fed rate hikes and increased borrowing by the U.S. Treasury is putting upward pressure on interest rates."

Mortgage Daily's analysis of Treasury market activity indicates that fixed mortgage rates could be around 6 BPS higher in Freddie's next survey.

Seventy-one percent of panelists surveyed by for the week Jan. 31 to Feb. 6 agreed with Mortgage Daily's forecast and predicted rates will rise. Twenty-one percent expected rates to remain within 2 BPS of their current levels, and just 7 percent projected a decline.

Interest rates on jumbo mortgages were 26 BPS more than conforming rates in the week ended Jan. 26, according to the U.S. Mortgage Market Index report from Mortgage Daily and Open Close. The spread thinned from 29 BPS the previous week.

Freddie's survey had 15-year fixed rates averaging 3.68 percent, 6 BPS higher than in the week ended Jan. 25. Fifteen-year rates were 54 BPS lower than 30-year rates versus 53 BPS less last week.

At 3.53 percent in Freddie's report, five-year, Treasury-indexed, hybrid adjustable-rate mortgages were a basis point more than in the last survey.

The yield on the one-year Treasury note, which determines rate changes on hybrid ARMs, was reported by the Department of the Treasury at 1.89 percent as of Thursday, surging from 1.80 percent the preceding Thursday.

Another, less-utilized, ARM index, the six-month London Interbank Offered Rate, was reported by at 1.97 percent as of Wednesday. LIBOR was 1.93 percent seven days earlier.

Also serving as an index on some legacy ARMs is the 11th District Cost of Funds Index, which the Federal Home Loan Bank of San Francisco reported at 0.753 percent as of December. COFI was 0.746 percent the prior month.

ARM share in the most-recent Mortgage Market Index report was 10.8 percent, more narrow than 13.5 percent a week prior.

Sam Garcia founded Mortgage Daily in 1998 and became its full-time publisher in 2000. Before that, he worked in mortgage lending for two decades.

[email protected]

Mortgage Market Index
A barometer of upcoming originations, the Mortgage Market Index includes data on jumbo, FHA and refinance activity.

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