Interest rates on residential loans continued to rise, this time to the highest level in nearly four years. The outlook is for continued escalation over the next week.
Freddie Mac’s Primary Mortgage Market Survey for the seven days that finished on Feb. 15 had thirty-year fixed rates averaging 4.38 percent.
That was the highest fixed interest rate for 30-year mortgages
since the week ended April 3, 2014, when long-term mortgage rates averaged 4.41 percent.
The 30 year moved up 6 basis points from the preceding week. Compared to the same seven-day period in 2016, the average has risen 23 BPS.
“Wednesday’s Consumer Price Index report showed higher-than-expected inflation; headline consumer price inflation was 2.1 percent year-over-year in January two tenths of a percentage point higher than the consensus forecast,” Freddie Mac Deputy Chief Economsit Len Kiefer said in the report. “Inflation measures were broad-based, cementing expectations that the Federal Reserve will go forward with monetary tightening later this year.
Kiefer noted that
the 10-year Treasury yield reached the highest level since January 2014, climbing above 2.90 percent.
An analysis of Treasury market data by Mortgage Daily indicates that fixed mortgage rates might be around 3 BPS higher in Freddie’s next survey.
A majority of panelists surveyed by Bankrate.com for the week Feb. 14 to Feb. 20 agreed with Mortgage Daily’s forecast and predicted mortgage rates will rise at least 3 BPS over the next week. No change was expected by 31 percent, and just 13 percent projected a decline.
Interest rates on jumbo mortgages were
21 BPS more than conforming rates in the U.S. Mortgage Market Index from Mortgage Daily and OpenClose for the week ended Feb. 9. The spread was 22 BPS one week prior.
At 3.84 percent, Freddie’s survey had 15-year fixed rates 7 BPS higher than in the week ended Feb. 8. Thirty-year rates were
54 BPS higher than 15-year rates, a little less than the 55-basis-point spread in the last report.
A six-basis-point rise from a week ago left five-year, Treasury-indexed, hybrid adjustable-rate mortgages at 3.63 percent in Freddie’s report.
The yield on the one-year Treasury note, which serves as the index for hybrid ARMs, was reported by the Department of the Treasury at 1.99 percent Thursday, soaring 8 BPS from seven days earlier.
As of Wednesday, another ARM index, the six-month London Interbank Offered Rate was 2.06 percent, Bankrate.com reported. LIBOR was 1.99 percent the previous Wednesday.
