Weekly mortgage rates surged to the highest level in more than two-and-a-half years, and the outlook is for them to stay put.
Thirty-year note rates averaged 3.81 percent on all residential loans that were closed during the month of November 2016.
Mortgage rates climbed 5 basis points from the previous month, while they were down from 4.23 percent a year previous.
The rates were reported by Ellie Mae Inc. in its November 2016 Origination Insight Report based on
a 75 percent sampling of applications initiated on its Encompass origination platform.
Ellie
said conventional 30-year rates averaged 3.88 percent last month, while rates on loans insured by the Federal Housing Administration were 3.77 percent, and rates on mortgages guaranteed by the Department of Veterans Affairs came in at 3.54 percent.
More recently, 30-year fixed rates averaged 4.30 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Dec. 22 — the highest average since it was 4.33 percent in the week ended April 24, 2014.
The 30 year leapt from 4.16 percent a week earlier and 3.96 percent a year earlier.
“A week after the only rate hike of 2016, the mortgage industry digested the Fed’s decision and this week’s survey reflects that response,” Freddie Mac Chief Economist Sean Becketti said in the report. “Following Yellen’s speech last Wednesday, the 10-year Treasury yield rose approximately 10 basis points.”
Fixed rates are unlikely to change much in Freddie’s next survey based on a Mortgage Daily analysis of Treasury market activity.
Seventy percent of the panelists surveyed by Bankrate.com for the week Dec. 22 to Dec. 28 agreed with Mortgage Daily’s forecast. Another 30 percent predicted rates will increase at least 3 BPS, and none projected a decline.
Freddie predicted in its
December 2016 Economic & Housing Market Forecast that 30-year fixed rates will average 3.8 percent this quarter then climb in the first-quarter 2017 to 4.2 percent — where it will remain the rest of the year.
The Housing Forecast: December 2016 from Fannie Mae has 30-year fixed rates at 3.8 percent in the fourth-quarter 2016 and 4.1 percent in the next three quarters.
In the U.S  Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Dec. 16, interest rates on jumbo mortgages were 7 BPS more than conforming rates. The jumbo-conforming spread swung from a negative 7 BPS the prior week.
Freddie’s survey had 15-year fixed rates averaging 3.52 percent, up from 3.37 percent in the week ended Dec. 15. Fifteen-year rates were
78 BPS better than 30-year rates. The spread thinned from 79 BPS the prior week.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.32 percent in Freddie’s report, rising from 3.19 percent the previous week.
Freddie’s forecast has hybrid ARMs going from 3.1 percent in the fourth-quarter 2016 to 3.4 percent three months later. Hybrid ARMs are then expected to come in at 3.5 percent during the remaining three quarters of next year.
Fannie predicts hybrid ARMs will go
from 2.9 percent in the final quarter of this year to 3.0 percent in the first-quarter 2017 and 3.1 percent the following two quarters.
The yield on the one-year Treasury note closed Thursday at 0.87 percent, according to Treasury Department data. The one-year yield was down from 0.91 percent seven days earlier.
Another, less-utilized, ARM index, the six-month London Interbank Offered Rate, was 1.32 percent as of Wednesday, Bankrate.com reported. LIBOR rose from 1.30 percent the prior Wednesday.
ARM share was 3.9 percent in November 2016, Ellie reported. The share slipped from 4.0 percent a month earlier and fell from 5.3 percent a year earlier.
In the most-recent Mortgage Market Index report, ARM share was 7.8 percent, thinning from 8.1 percent the previous week.
