A nice improvement was reported this week for fixed mortgage rates. But some signs suggest an increase is in store for next week’s report.
In the week ended Thursday, 30–year fixed rates averaged 4.27 percent in Freddie Mac’s Primary Mortgage Market Survey.
The 30 year was 7 basis points better than in the previous report and the lowest it’s been in six weeks. But 30-year rates were nowhere as good as the 3.41 percent average of a year earlier.
Freddie Mac Chief Economist Frank Nothaft pointed to a weaker-than-expected March housing starts report in his assessment of the latest activity.
Ellie Mae released data indicating that 30-year rates fell to 4.604 percent in March from 4.655 percent in February.
Fixed rates are poised to increase around 8 BPS in Freddie’s next report based on this week’s Treasury market activity. Data released by the Treasury Department indicate that the yield on the 10-year Treasury note — which is tracked by fixed mortgage rates — averaged 2.65 percent during the days that Freddie conducted its survey, while the 10-year yield closed at 2.73 percent Thursday.
But don’t expect any changes in rates based on a majority of panelists surveyed by Bankrate.com for the week April 17 to April 23. An equal share, 22 percent, projected rates will either rise or fall at least 3 BPS over the next week.
In its April 2014 Economic and Housing Market Outlook, Freddie predicted that 30-year rates will average 4.5 percent in the second quarter and rise 20 BPS every three months after that through the end of next year — when the average is expected to reach 5.7 percent.
Jumbo mortgages were priced 1 basis point less than conforming loans in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended April 11. The jumbo conforming spread swung from a positive less than a basis point in the previous report.
Freddie reported average 15-year fixed rates at 3.33 percent, 5 BPS less than in the report for the week ended April 10. Fifteen-year mortgages were less attractive this week, as shorter-term loans were just 94 BPS better than 30-year rates versus the 96-basis-point spread in place in the prior report.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.03 percent in Freddie’s report, 6 BPS less than in the previous week. Freddie projects hybrid ARMs will average 3.2 percent in the second quarter, 3.3 percent in the third quarter and 3.5 percent in the final quarter of this year.
Bucking the trend this week were one-year Treasury-indexed ARMs, which increased 3 BPS from a week earlier to 2.44 percent in Freddie’s latest report. Still, the one-year ARM average was lower than 2.63 percent in the week ended April 18, 2013.
In Freddie’s outlook, the one year is expected to rise from 2.6 percent in the current quarter to 2.7 percent throughout the second half.
The index for one-year ARMs, the yield on the one-year Treasury note, was reported by the Treasury Department at 0.11 percent Thursday, up from 0.09 percent seven days sooner.
An index utilized on many legacy subprime ARMs, the six-month London Interbank Offered Rate — or LIBOR — was down 1 basis point from last week to 0.32 percent, according to Bankrate.com.
ARM share in the latest Mortgage Market Index report was 13.5 percent, off from 14.0 percent seven days earlier.
Ellie reported that ARM share was 7.4 percent in March, down from the prior month’s 6.9 percent.
ARM share if forecasted by Freddie to be 11 percent this quarter, 12 percent in the third quarter and 13 percent in the final quarter.
