Long-term fixed rates on home loans dropped to the lowest level in almost three years, and all signs point to similar rates in the next report.
In Freddie Mac’s
Primary Mortgage Market Survey for the week that ended on May 12, thirty-year fixed rates averaged 3.57 percent.
The last time that 30-year fixed rates were this low was in the week that ended on May 16, 2013, when the average landed at 3.51 percent.
“Disappointing April employment data once again kept a lid on Treasury yields, which have struggled to stay above 1.8 percent since late March,” Freddie Mac Chief Economist Sean Becketti said in the report.
Thirty-year fixed rates averaged 3.61 percent in the week ended May 5, 2016, and 3.85 percent in the week ended May 14, 2015.
There is likely to be little change in fixed rates in Freddie’s next survey, according to an analysis of Treasury market activity by Mortgage Daily.
Nearly three-quarters of panelists surveyed by Bankrate.com for the week May 12 to May 18 agreed with Mortgage Daily’s forecast and predicted rates won’t move more than 2 basis points over the next week. A decline was projected by 18 percent, and just 9 percent expected an increase.
Even Greg McBride, the senior financial analyst at Bankrate.com, doesn’t expect much movement in mortgage rates.
“Mortgage rates have been in a narrow range and expect them to stay that way,” McBride said in a written statement to Mortgage Daily. “The Fed is increasingly jawboning that a June or July rate hike cannot be ruled out, but the soft economic data doesn’t support that, and the market certainly isn’t buying it.”
Interest rates on jumbo mortgages were 3 BPS less than rates on conforming loans in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended May 6. The spread widened from a negative 2 BPS in the previous report.
In Freddie’s most-recent survey, 15-year fixed rates averaged 2.81 percent, 5 BPS better than a week earlier. Fifteen-year rates were
76 BPS less than 30-year rates, wider than the 75-basis-point spread in the previous report.
At 2.78 percent, the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaged 2 BPS less than in Freddie’s previous report.
One-year ARMs averaged 2.56 percent as of Thursday, HSH.com reported, tumbling from 2.68 percent seven days prior. In the same week last year, one-year ARMs averaged 2.48 percent based on data previously reported by Freddie.
One-year ARMs adjust based on the yield on the one-year Treasury note, which closed at 0.54 percent Thursday, according to Treasury Department data. The one-year Treasury yield was up from 0.51 percent a week earlier.
Some ARMs adjust according to movement in the six-month London Interbank Offered Rate. Bankrate.com reported that LIBOR was 0.90 percent as of Wednesday, no different that the previous Wednesday.
ARM share was 7.9 percent in the latest Mortgage Market Index report, thinning from 11.4 percent one week prior.
