Fixed rates on home loans moved solidly lower this past week but are positioned to make a move higher.
Results from Freddie Mac’s Primary Mortgage Market Survey indicate that 30-year fixed rates averaged 3.59 percent in the week ended Feb. 5.
Long-term rates improved 7 basis points compared to the prior week and were down 73 BPS versus the same week last year.
“Mortgage rates fell this week following the release of weaker than expected pending home sales, which fell 3.7 percent in December,” Freddie Mac Deputy Chief Economist Len Kiefer said in the report. “Moreover, real GDP growth for the fourth quarter was 2.6 percent and the Institute for Supply Management reported slower growth in manufacturing last month, both missing market consensus forecasts.”
But fixed rates are poised to give up all of their improvement based on Mortgage Daily’s analysis of the past week’s Treasury market activity — which has rates around 7 BPS higher in Freddie’s next survey.
One wild card is tomorrow’s employment report, which can have great influence over long-term rates.
Over at Bankrate.com, nearly half of panelists surveyed for the week Feb. 5 to Feb. 11 predicted rates won’t change more than 3 BPS over the next week. Less than a third forecasted a decline, and fewer than a quarter expected rates to increase.
The jumbo-conforming spread widened to 20 BPS in the U.S. Mortgage Market Index from LoanSifter/Optimal Blue and Mortgage Daily for the week ended Jan. 30 from 19 BPS in the prior report.
Freddie said 15-year fixed rates averaged 2.92 percent, 6 BPS better than in the report for the week ended Jan. 29. The spread between 15- and 30-year mortgages
was 67 BPS, slightly thinner than 68 BPS in the last report.
At 2.82 percent, the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaged 4 BPS less than in the last survey, Freddie reported.
Defying all other tracked products, one-year Treasury-indexed ARMs increased — rising 1 basis point to 2.39 percent in Freddie’s most-recent survey. Still, the one-year was far less than the 2.55 percent average in the week ended Feb. 6, 2014.
Existing one-year ARM borrowers are subject to changes in the one-year Treasury yield, which climbed to 0.20 percent Thursday from 0.17 percent seven days earlier, according to Treasury Department data.
There was no change from a week earlier in the six-month London Interbank Offered Rate, which Bankrate.com reported at 0.36 percent Wednesday.
ARM share fell to 8.9 percent in the latest Mortgage Market Index report from 9.4 percent one week prior.
