Fixed interest rates on residential loans took a dive on a weak employment report but are poised to bounce back up in the next report.
In Freddie Mac’s Primary Mortgage Market Survey for the week ended Oct. 8, the average 30-year fixed rate was 3.76 percent.
The last time that fixed interest rates on 30-year mortgages were this low was in the week ended April 30, when they came in at 3.68 percent.
Thirty-year interest rates tumbled from the last report, when the average was 3.85 percent. An even bigger decline was made from the same week last year, when the 30 year was 4.19 percent.
Behind the
improvement was a weak employment report, according to Freddie Mac Chief Economist Sean Becketti.
“Calling the September jobs report disappointing is an understatement,” Becketti said in Freddie’s report. “The sputtering U.S. economy added only 142,000 jobs. To make matters worse, there were downward revisions to the prior two months. Hourly wages were flat, and the labor force participation rate fell to 62.4 percent, the lowest rate since 1977.”
Mortgage rates haven’t moved much since Freddie’s survey was conducted, according to Joe Farr, director, MBSQuoteline.
“There has been little net change in MBS prices since the Freddie Mac survey was conducted, so the nice improvement shown in the survey released Thursday is a good representation of what borrowers will actually see on Thursday,” Farr said in a written statement.
But fixed rates on residential loans are likely to be approximately five basis points higher in Freddie’s next survey based on Mortgage Daily’s analysis of Treasury market activity.
However, half of the panelists surveyed by Bankrate.com for the week from Oct. 8 to Oct. 14 predicted mortgage rates won’t move more than two BPS over the next week. An increase was predicted by 41 percent, and just nine percent forecasted a decline.
Rate locks on jumbo mortgages yielded interest rates that were 27 BPS less than on conforming loans, according to the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Oct. 2. The jumbo-conforming spread widened significantly from 17 BPS seven days previous.
At 2.99 percent,
15-year fixed rates averaged eight BPS less than in Freddie’s survey for the week ended Oct. 1. Fifteen-year mortgages were priced 77 BPS less than 30-year mortgages. The spread was thinner than 78 BPS a week previous.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.88 percent in Freddie’s latest report, down three BPS from seven days earlier.
Freddie said one-year Treasury-indexed ARM rates averaged 2.55 percent, rising two BPS from a week earlier and 13 BPS from the week ended Oct. 9, 2014.
The yield on the one-year Treasury note, which determines rate and payment changes on one-year ARMs, closed Thursday at 0.27 percent, four BPS less than one week prior, according to Department of the Treasury data.
Bankrate.com reported that another ARM index, the six-month London Interbank Offered Rate — or LIBOR — was 0.53 percent as of Wednesday, unchanged for two consecutive weeks.
ARMs made up 12.8 percent of all activity in the most-recent Mortgage Market Index report. ARM share fattened from 10.5 percent in the week-earlier report.
