It was a good week for fixed mortgage rates, and another improvement might be ahead. Adjustable rates, however, were worse.
Prospective fixed-rate borrowers got a break this week, with average 30-year mortgage rates falling 4 basis points from seven days earlier to 4.29 percent.
That was according to the Primary Mortgage Market Survey for the week ended May 1 from Freddie Mac.
Thirty-year rates, however, remain well above the 3.35 percent in place a year ago.
“Mortgage rates were down slightly following the release of real GDP estimates for the first quarter of the year which rose 0.1 percent and fell well short of market expectations,” Freddie Mac Chief Economist Frank Nothaft said in the survey.
Thirty-year fixed rates fell despite the Federal Open Market Committee’s decision to trim its monthly investments in agency mortgage-backed securities to $20 billion a month from $25 billion.
Freddie’s regulator, the Federal Housing Finance Agency, reported that 30-year fixed rates averaged 4.51 percent in March, 6 BPS higher than in February.
Thirty-year rates are poised to drop another 6 BPS or so in Freddie’s next report based on this week’s Treasury market activity.
Data delivered by the Department of the Treasury indicate that the yield on the 10-year Treasury yield — a benchmark for fixed rates — averaged 2.69 percent during the days Freddie was surveying lenders for this week’s report, while the 10-year yield closed at 2.63 percent Thursday.
But more than two-thirds of panelists surveyed by Bankrate.com for the week May 1 to May 7 predicted that mortgage rates won’t move more than 2 BPS over the next week. A rise was forecasted by 22 percent, and 11 percent expected a decline.
In the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended April 24, jumbo mortgages were priced at a 3-basis-point premium over conforming loans. The jumbo-conforming spread swung from a negative 2 BPS a week earlier.
Freddie said 15-year fixed rates were off just 1 basis point from the week ended April 24 to 3.38 percent. The disparity in the decline between 15- and 30-year mortgages cut the spread between the two products to 91 BPS from 94 BPS in the previous report.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.05 percent, 2 BPS higher than in Freddie’s last survey.
A one-basis-point rise from seven days earlier left one-year Treasury-indexed ARMs at 2.45 percent, Freddie said. The one-year ARM was 11 BPS better, however, than in the week ended May 2, 2013.
One-year ARMs adjust according to movement in the one-year Treasury yield, which closed at 0.10 percent, the same as a week earlier, Treasury Department data indicate.
Another ARM index, the six-month London Interbank Offered Rate, was unchanged over the past week at 0.32 percent as of Wednesday, Bankrate.com reported.
ARM share in the latest Mortgage Market Index report narrowed to 13.1 percent from 13.7 the previous week.
