Interest rates on residential loans moved higher this past week as markets recovered from bad economic news, and little change is likely over the next week.
At an average of 3.82 percent, 30-year fixed rates on home loans were six basis points more than they were as of seven days earlier.
That was according to the Primary Mortgage Market Survey for the week that ended Oct. 15 released Thursday by secondary mortgage lender Freddie Mac.
“As the shock of the weak September employment report wore off, Treasury rates drifted higher,” Freddie Mac Chief Economist Sean Becketti explained in the report.
Thirty-year rates were down, however, from 3.97 percent a year earlier.
“Late-breaking news suggests mortgage rates may remain in this territory a while longer,” Becketti added. “After this week’s survey closed, Federal Reserve Governor Daniel Tarullo was quoted suggesting the Fed may not act this year, and Wednesday the 10-year Treasury closed under 2 percent in reaction to economic releases indicating weak consumer demand.”
Joe Farr, director at MBSQuoteline,
said in a written statement that prices on mortgage-backed securities have improved since the Freddie Mac survey was conducted.
Bond yields move lower as bond prices rise.
“So as of Thursday, rates should be a little better than what is shown in the survey,” Farr stated.
An analysis of Treasury market activity by Mortgage Daily indicates that fixed rates are unlikely to be much different in Freddie’s next report.
But a plurality of panelists surveyed by Bankrate.com for the week Oct. 15 to Oct. 21 predicted mortgage rates will move at least three basis points lower over the next week. A third projected no change, and a quarter expected an increase.
Rates on jumbo mortgages were 12 BPS less than on conforming loans in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Oct. 8. The jumbo-conforming spread thinned from a negative 28 BPS one week prior.
Freddie reported 15-year fixed rates at an average of 3.03 percent, up four BPS from the week ended Oct. 8. Fifteen-year rates were 79 BPS less than 30-year rates in the latest report. The spread widened from 77 BPS in the last report.
No change from a week earlier left five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 2.88 percent in Freddie’s survey.
One-year Treasury-indexed ARMs averaged 2.54 percent, Freddie reported, a single basis point less than seven days prior but 16 BPS more than 12 months prior.
One-year ARMs adjust based on movement in the one-year Treasury yield, which tumbled to 0.22 percent on Thursday from 0.27 percent a week earlier, according to Treasury Department data.
Another, less utilized, ARM index — the six-month London Interbank Offered Rate — was 0.52 percent as of Wednesday, Bankrate.com reported. LIBOR was down from 0.53 percent as of one week prior.
ARMs accounted for 11.5 percent of all activity in the most-recent Mortgage Market Index report.
