Long-term rates on residential loans climbed to the highest level in seven years. More of the same could be in store for the week ahead. Veterans loans had the lowest rates.
Ellie Mae Inc. reported in its Origination Insight Report | April 2018 that 30-year note rates averaged 4.79 percent on home loans closed during April.
“This month we saw interest rates increase to the highest percentage point since Ellie Mae began reporting data in 2011,” Ellie Mae President and Chief Executive Officer Jonathan Corr stated in an accompanying announcement.
Last month’s average rate on conventional loans was 4.80 percent. The note rate was 4.84 percent on loans insured by the Federal Housing Administration, while mortgages guaranteed by the Department of Veterans Affairs had the lowest interest rates: 4.63 percent.
During just the seven days ended May 17, thirty-year fixed rates in Freddie Mac’s
Primary Mortgage Market Survey averaged 4.61 percent — the highest average since it was also 4.61 percent in the week ended May 19, 2011.
“Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week,” Freddie Mac Chief Economist Sam Khater explained in the report.
Fixed mortgage rates could increase another 5 BPS over the next week, according to a Mortgage Daily analysis of Treasury market activity.
A majority of panelists surveyed by Bankrate.com for the week May 16 to May 22 agreed with Mortgage Daily’s forecast and predicted mortgage rates will rise at least 3 BPS over the next week. A decline was expected by 27 percent, and 18 percent projected no change.
In Fannie Mae’s Housing Forecast: May 2018, the secondary lender predicts 30-year fixed rates will go from 4.5 percent this quarter to 4.6 percent in the second-half 2018.
Jumbo interest rates were
17 BPS higher than conforming rates in the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended May 11. The spread widened from 11 BPS in the previous index.
In Freddie’s survey, 15-year fixed rates averaged 4.08 percent, up 7 BPS from the week ended May 10.
Fifteen-year rates were 53 BPS less than 30-year rates, off from 54 BPS a week ago.
Five-year, Treasury-indexed, hybrid adjustable-rate mortgages averaged 3.82 percent in Freddie’s report, rising 5 BPS over the past week.
Fannie forecasts that hybrid ARM rates will average 3.8 percent in the second quarter and rise 10 BPS each remaining quarter of this year.
The yield on the one-year Treasury note, which determines rate changes on hybrid ARMs, closed Thursday at 2.32 percent, up from 2.27 percent the preceding Thursday, according to Treasury Department data.
A more obscure ARM index, the six-month London Interbank Offered Rate, was reported by Bankrate.com at 2.49 percent as of Wednesday, retreating from 2.52 percent seven days earlier.
Secured Overnight Financing Rate was reported by the Federal Reserve Bank of New York at 1.75 percent as of Wednesday, rising 3 BPS over the past week.
In the most-recent Mortgage Market Index report, ARM share was 15.8 percent, thinning from 20.8 percent the prior week.
ARM share was 6.6 percent during April, according to Ellie Mae, widening from 6.3 percent the prior month and 5.9 percent a year prior. Last month’s ARM share was 7.3 percent on conventional loans and 0.6 percent on government transactions.