Fixed mortgage rates took a tumble this past week and, barring an exceptionally strong employment report, are likely to improve further.
Thirty-year fixed rates averaged 3.61 percent in Freddie Mac’s Primary Mortgage Market Survey for the that week ended on May 5.
Long-term mortgages rates tumbled 5 basis points versus a week earlier. Compared to a year earlier, 30-year fixed rates have fallen 19 BPS.
“The Fed’s decision to stand pat followed by a week of assorted unsettling news drove Treasury yields lower,” Freddie Mac Chief Economist Sean Becketti explained in the report. “As a consequence, the 30-year mortgage rate drifted down to 3.61 percent, just 3 basis points above the low for the year. ”
A further decline — of around 7 BPS — is likely in Freddie’s next report, according to a Mortgage Daily analysis of Treasury market activity.
Half of the panelists surveyed by Bankrate.com for the week May 5 to May 11 agreed with that assessment and predicted rates will fall at least 3 BPS over the next week. A third projected no change, and just 17 percent expected an increase.
But a positive employment report Friday could send rates higher — which is exactly what Bankrate.com Chief Financial Analyst Greg McBride expects.
“A strong employment report will cause talk of a possible June rate hike to heat up, pushing rates a little bit higher,” McBride said in a written statement to Mortgage Daily.
On jumbo mortgages, interest rates were
2 BPS more than on conforming loans, according to the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended April 29. The jumbo-conforming spread thinned from 4 BPS in the previous report.
Freddie’s survey indicated that 15-year fixed rates averaged 2.86 percent, retreating 3 BPS from the week ended April 28. The difference between 15- and 30-year rates narrowed to
75 BPS from 77 BPS in the last report.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.80 percent in Freddie’s survey, 6 BPS better than the previous week.
HSH.com reported that one-year ARMs were 2.68 percent as of Thursday,
declining from 2.73 percent seven days earlier. Still, the one year was worse than in the week ended May 7, 2015, when Freddie previously reported that it averaged 2.46 percent.
The yield on the one-year Treasury note, which is used as the index for the one-year ARM, sank to 0.51 percent Thursday from 0.56 percent seven days prior, according to data from the Department of the Treasury.
Another ARM index, the
six-month London Interbank Offered Rate, was 0.90 percent Wednesday, Bankrate.com reported. LIBOR was off from 0.91 percent the prior Wednesday.
In the latest Mortgage Market Index report, ARM share
was 11.4 percent — unusually high given how low fixed rates currently are. ARM share was just 7.8 percent one week prior.
