Although there was no change over the past seven days with long-term fixed mortgage rates, they might be higher in next week’s report.
Fixed interest rates on 30-year loans averaged 4.13 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday.
Thirty-year rates didn’t change from the previous week. But long-term mortgage rates were lower than in the same week in 2013, when the average was 4.31 percent.
It’s looking like fixed rates might be a little higher in next week’s survey from Freddie based on this week’s Treasury market activity.
The yield on the 10-year Treasury note, which is tracked by fixed mortgage rates, averaged 2.48 percent during the period Freddie was surveying lenders this week, based on Treasury Department data. The 10-year yield closed at 2.52 percent Thursday. The movement points to a roughly 4-basis-point rise in the next report.
A majority of panelists surveyed by Bankrate.com for the week July 24 to July 30, however, predicted mortgage rates won’t move more than 2 BPS over the next week. Another 29 percent forecasted a decline, and just 14 percent projected an increase.
Freddie predicted in its July 2014 Economic and Housing Market Outlook that 30-year fixed rates will average 4.3 percent in the third quarter then increase 20 BPS during the following three-month period.
Fannie Mae was a little more optimistic in its Housing Forecast: July 2014, predicting that the 30 year would go from 4.2 percent this quarter to 4.3 percent in the fourth quarter.
But the Mortgage Bankers Association was far more pessimistic in its MBA Mortgage Finance Forecast, putting 30-year rates at 4.6 percent in the third quarter and 4.7 percent in the fourth quarter.
Jumbo mortgage pricing improved in the U.S. Mortgage Market Index report from LoanSifter/Optimal Blue and Mortgage Daily for the week ended July 18, with the jumbo-conforming spread widening to a negative 11 BPS from a negative 8 BPS in the previous report.
Freddie reported average 15-year fixed rates at 3.26 percent, 3 BPS more than in the week ended July 17. The spread between 15- and 30-year rates narrowed to 87 BPS from 90 BPS in the previous report.
A 2-basis-point increase from seven days earlier left five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 2.99 percent in Freddie’s latest report.
Freddie expects hybrid ARMs to average 3.3 percent this quarter and 3.6 percent in the fourth quarter. Fannie’s outlook is for hybrid ARMs to be 3.0 percent in the third quarter and 3.1 percent three months later.
At 2.39 percent, average one-year Treasury-indexed ARMs averaged the same as last week and 26 BPS less than the week ended July 25, 2013.
In Freddie’s forecast, average one-year ARMs are projected to rise from 2.5 percent in the third quarter to 2.6 percent in the final quarter of this year. But the one-year ARM in Fannie’s outlook is expected to climb from 2.4 percent to 2.5 percent.
One-year ARMs adjust based on the one-year Treasury yield, which the Department of the Treasury reported at 0.11 percent Thursday, 1 basis point more than seven days earlier.
Another ARM index, the six-month London Interbank Offered Rate, was 0.33 percent as of Wednesday, the same as one week prior, Bankrate.com reported.
The latest Mortgage Market Index report had ARM share at 11.2 percent, broader than 11.0 percent in the previous week
ARM share in Freddie’s forecast is predicted to expand from 12 percent this quarter to 13 percent in the fourth quarter. Fannie has ARM share increasing from 10 percent to 11 percent.
