Mortgage Daily

Published On: April 19, 2018

It’s been more than four years since long-term mortgage rates have been as high as they were this week. In the upcoming week, fixed rates are likely to deteriorate even more.

Thirty-year note rates on all home loans that were originated during March averaged 4.69 percent, increasing from the preceding month by 21 basis points.

The rate escalation was even more severe compared to the same month last year, when average 30-year note rates were determined to be 4.39 percent.

Ellie Mae Inc. provided the average rates in its March 2018 Origination Insight Report.

Ellie reported that rates averaged 4.72 percent on conventional transactions, 4.73 percent on loans insured by the Federal Housing Administration and 4.50 percent on mortgages guaranteed by the Department of Veterans Affairs.

In Freddie Mac’s Primary Mortgage Market Survey for the week ended April 19, thirty-year fixed rates averaged 4.47 percent — the highest they’ve been since they were 4.51 percent in the week ended Jan. 9, 2014.

In last week’s survey, long-term rates averaged 4.42 percent, while they stood at 3.97 percent in the week ended April 20, 2017.

Fixed rates could climb another 8 BPS in Freddie’s next survey according to a Mortgage Daily analysis of Treasury market activity.

A majority of panelists surveyed by for the week April 18 to April 24 agreed with Mortgage Daily’s forecast and predicted rates will rise over the next week. Thirty-eight percent expected that rates won’t move more than 2 BPS, and just 8 percent projected a drop.

Interest rates on jumbo mortgages were 8 BPS more than conforming rates in the
U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended April 13, less than the 10 BPS the preceding week.

In its Housing Forecast: April 2018, Fannie Mae predicted 30-year fixed rates will average 4.4 percent this quarter and in the third quarter then rise to 4.5 percent in the final quarter of this year.

Borrowers could save an average of $1,500 over the life of a 30-year mortgage if they would just get one additional rate quote, Freddie said in its April Insight.

“The average expected savings increases to $2,914 if the borrower receives five rate quotes — and 80 percent of these borrowers who obtain five quotes will save between $2,089 and $3,904,” Freddie said.

Freddie’s survey had 15-year fixed rates at 3.94 percent, jumping 7 BPS from the week ended April 12. Meanwhile, the spread between 15- and 30-year rates thinned to 53 BPS from 55 BPS a week ago.

A six-basis-point rise was recorded for average rates on five-year, Treasury-indexed, hybrid adjustable-rate mortgages, which averaged 3.67 percent, Freddie reported.

Fannie expects hybrid ARMs to average 3.8 percent in the second quarter and the following three-month period then increase to 3.9 percent in the fourth quarter.

The yield on the one-year Treasury note, which is used to determine rate changes on hybrid ARMs, was 2.21 percent Thursday, soaring 10 BPS from seven days earlier, according to Treasury Department data. reported that the six-month London Interbank Offered Rate was 2.50 percent as of Wednesday, rising 3 BPS from the previous Wednesday.

The Federal
Reserve Bank of New York reported that the Secured Overnight Financing Rates, which is set to replace LIBOR when it is retired in 2021, was 1.75 percent as of Wednesday. SOFR was a basis point less than one week earlier.

ARM share was 14.4 percent in the latest Mortgage Market Index report, slightly more narrow than 14.6 percent in the week ended April 6.

The 11th District Cost of Funds Index was recently reported by the Federal Home Loan Bank of San Francisco at 0.816 percent as of February, up from 0.777 percent the previous month.

Ellie’s data indicate that ARM share
widened to 6.3 percent last month from 5.5 percent in February and 5.6 percent in March 2016. ARM share was 7.0 percent on conventional mortgages, 0.6 percent on FHA closings and 0.5 percent on VA originations.

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