Interest rates on residential loans are teetering near all-time lows, and a key economic report tomorrow could determine if a new record is set.
Freddie Mac’s Primary Mortgage Market Survey had 30-year fixed mortgage rates averaging 3.41 percent in the week that ended on July 7.
The last time that 30-year fixed rates have been this low was in the week that ended on May 2, 2013, when the 30 year averaged 3.35 percent.
The 30 year currently stands 10 basis point above the record low set in the week ended Nov. 21, 2012, when it averaged 3.31 percent.
Thirty-year rates were 3.48 percent in last
week’s report and 4.04 percent this week last year.
“Continuing fallout from the Brexit vote drove Treasury yields lower again this week,” Freddie Mac Chief Economist Sean Becketti explained in the report.
Joe Farr, a director at MBSQuoteline, said in a written statement that prices of mortgage-backed securities have changed little since Freddie conducted its survey — an indication that interest rates on home loans are little changed from this week’s survey.
Farr said that tomorrow’s mortgage rate is likely to be the lowest in years unless the employment report is much better than expected.
Mortgage Daily’s analysis of Treasury market activity suggests that rates are likely to be little changed, maybe a couple BPS higher, in Freddie’s next report.
A majority of panelists surveyed by Bankrate.com for the week July 7 to July 13 predicted that mortgage rates will decline at least 3 BPS over the next week. No change was forecasted by a third, and only 11 percent expected an increase.
Bankrate.com Chief Financial Analyst explained in a written statement that the direction of mortgage rates hinge on tomorrow’s Labor Department report.
“Markets are very skittish and mortgage rates keep following bond yields lower,” McBride said. “If the jobs report disappoints, we’ll see another notable drop in rates. If it’s a better number on payroll growth, we’ll see a slight lift on mortgage rates.”
The U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended July 1 had interest rates on jumbo mortgages at 1 basis point more than conforming rates. The jumbo-conforming spread sank from 7 BPS a week earlier.
Fifteen-year fixed rates averaged
2.74 percent in Freddie’s latest report, 4 BPS better than in the week ended June 30, 2016. The spread between 15- and 30-year rates thinned to 67 BPS from 70 BPS the prior week.
Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.68 percent, off from 2.70 percent in last week’s report.
HSH.com reported that one-year Treasury-index ARMs were 2.61 percent as of Thursday, off from 2.65 percent seven days earlier. Previously reported data from Freddie indicate that one-year ARMs averaged 2.50 percent in the week ended July 9, 2015.
The one-year Treasury yield, which determines rate changes on most ARMs, closed today at 0.47 percent, up from 0.45 percent a week prior, according to Treasury Department data.
The six-month London Interbank Offered Rate was
0.93 percent as of Wednesday, Bankrate.com reported. LIBOR climbed from 0.90 percent the previous Wednesday.
ARM share was 5.7 percent in the most-recent Mortgage Market Index report, far thinner than 9.1 percent the prior week.
