A small increase was recorded for rates on home loans this past week, and rates could go higher if there are no surprises in an upcoming economic report.
A two-basis-point week-over-week increase was recorded for 30-year fixed mortgage rates, which averaged 3.64 percent in the week ended March 3.
That was according to Freddie Mac’s Primary Mortgage Market Survey, which had 30-year rates averaging 3.75 percent as of the same week last year.
“The market turbulence that kicked off the year subsided at the end of February, providing at least a temporary break in the flight to quality,” Freddie Mac Chief Economist Sean Becketti said in the report, adding, “Despite this welcome breather, Fed officials have been highlighting the downside risks to the economic outlook, and the market expects the Fed to refrain from any further short-term rate increases for now.”
Prices on mortgage-backed securities have fallen since Freddie conducted its survey, pushing mortgage rates higher, according to MBSQuoteline Director Joe Farr.
A Mortgage Daily analysis of Treasury market activity suggests that fixed rates on home loans could be around three BPS higher in Freddie’s next survey.
Sixty-four percent of panelists surveyed by Bankrate.com for the week March 3 to March 9 agreed with Mortgage Daily’s forecast and predicted an increase of at least three BPS over the next week in mortgage rates. No change was expected by 22 percent, and a decline was projected by 14 percent.
However, a weak employment report on Friday — fewer than 175,000 jobs added — could pull bond yields, and mortgage rates, lower, while a strong report — more than 225,000 jobs added — could push them higher.
In Freddie’s February 2016 Economic and Housing Market Outlook, 30-year rates are forecasted to average 3.8 percent this quarter, 3.9 percent in the second quarter and 4.2 percent during the following three months.
Interest rates on jumbo mortgages were seven BPS less than on conforming loans in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Feb. 26. The jumbo-conforming spread was the same as a week earlier.
Freddie’s survey had 15-year fixed rates averaging 2.94 percent, a basis point more than in the week ended Feb. 25. The spread between 15- and 30-year rates widened to 70 BPS from 69 BPS in the last report.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.84 percent in Freddie’s latest report, five BPS worse than a week ago.
Freddie’s forecast has hybrid ARMs averaging 2.9 percent in the first quarter, 3.1 percent three months later and 3.4 percent in the third quarter.
HSH.com reported that one-year ARMs were 2.58 percent as of Wednesday, more than 2.41 percent seven days earlier.
The yield on the one-year Treasury note, which determines rate changes on one-year ARMs, jumped to 0.65 percent Thursday from 0.56 percent one week prior, according to the Department of the Treasury.
Another ARM index, the six-month London Interbank Offered Rate, was reported by Bankrate.com at 0.88 percent as of Wednesday. LIBOR was unchanged from the previous Wednesday.
ARM share widened to 9.9 percent in the most-recent Mortgage Market Index from 7.7 percent the prior week.
