Fixed mortgage rates moved higher this week even as adjustable rates saw a decline. Fixed rates are forecasted to decline by next week’s report.
At 4.37 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Feb. 27, 30-year fixed rates averaged 4 basis points more than last week.
Compared to the same week last year, average 30-year fixed rates have increased by a whopping 86 BPS.
“Mortgage rates edged up with new home sales exceeding expectations and rising to a seasonally adjusted pace of 468,000 units in January, the strongest annual rate since July 2008,” Freddie Mac Chief Economist Frank Nothaft said in the report. “The 9.6 percent increase in new home sales for January followed an upward revision of 13,000 units in December. The S&P/Case-Shiller 20-city composite house price index rose 13.4 percent over the 12-months ending in December 2013.”
Freddie’s regulator, the Federal Housing Finance Agency, reported that conventional 30-year fixed rates averaged 4.67 percent last month, up 13 BPS from December.
Mortgage Daily’s analysis of this week’s Treasury market activity indicates that the 30 year is likely to fall around 6 BPS in Freddie’s next report.
Fixed mortgage rates tend to track the yield on the 10-year Treasury note, which averaged 2.71 percent during the days that Freddie surveyed primary lenders this week, according to Treasury Department data. The 10-year yield closed at 2.65 percent Friday.
In agreement with Mortgage Daily’s forecast were 71 percent of the panelists surveyed by Bankrate.com for the week Feb. 27 to March 5. The remaining 29 percent didn’t expect rates to move more than 2 BPS over the next week. None of the panelists projected an increase.
Fannie Mae predicts that 30-year rates will average 4.4 percent in the first half of this year then rise to 4.6 percent in the third quarter.
Jumbo mortgages were priced at just 5 BPS more than conforming rates in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended Feb. 21. The jumbo-conforming spread was the same as one week prior.
Fifteen-year fixed-rate mortgages averaged 3.39 in Freddie’s latest report, up from 3.35 percent in the week ended Feb. 20. At 98 BPS, there was no change from last week in the spread between 15- and 30-year loans.
Freddie reported average five-year, Treasury-indexed, hybrid, adjustable-rate mortgages at 3.05 percent, down from 3.08 percent in the previous report.
Fannie’s forecast has hybrid ARMs averaging 3.1 percent in the first quarter, rising to 3.2 percent three months later and a increasing to 3.4 percent in the third quarter.
Also declining were Treasury-indexed one-year ARMS, which fell to 2.52 percent from 2.57 percent a week earlier, Freddie said. One-year ARMs averaged 2.64 percent in the week ended Feb. 28, 2013.
The one year is expected to rise from 2.5 percent in the first three months of this year to 2.6 percent then reach 2.8 percent in the third quarter.
The index for the one-year ARM, the yield on the one-year Treasury note, slipped to 0.11 percent today from 0.12 percent last Thursday, the Treasury Department data indicate.
The six-month London Interbank Offered Rate, which is used an index on some subprime ARMs, averaged 0.33 percent Wednesday, the same as a week earlier, according to Bankrate.com.
ARM share in the latest Mortgage Market Index report rose to 13.2 percent from 12.9 percent the prior week.
ARM share in Fannie’s forecast is expected go from 9 percent this quarter to 10 percent in the second quarter then average 12 percent in the following three-month period.
