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Drop In Mortgage Rates Likely to Hold

Interest rates on home loans tumbled over the past week, and they are likely to remain there over the next week. A report on monthly closings had loans to veterans with the lowest rates.

Single-family loans that were closed during July had an average 30-year note rate of 4.91 percent, according to the Ellie Mae Origination Insight Report | July 2018.

Long-term mortgage rates moved up from the previous month by one basis point. The increase was far more significant versus the same month in 2017, when the average was 4.25 percent.

At 4.75 percent, interest rates on loans guaranteed by the Department of Veterans Affairs were the lowest last month. On conventional mortgages, the average was 4.93 percent, while it was 4.95 percent on loans insured by the Federal Housing Administration.

Freddie Mac reported in its Primary Mortgage Market Survey for the week ended Aug. 16 that 30-year fixed rates averaged 4.53 percent. The 30 year tumbled 6 BPS from the last report but has increased 64 BPS over the past year.

Rates are likely to remain near their current level in Freddie’s survey next week, according to an analysis of Treasury Market data by Mortgage Daily.

More than two-thirds of panelists surveyed by for the week Aug. 15 to Aug. 21 agreed with Mortgage Daily’s forecast and predicted rates won’t move over the next week. An increase of at least 3 BPS was expected by 22 percent, and just 11 percent projected a decline.

In the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Aug. 10, jumbo rates were 13 BPS higher than conforming rates. The spread thinned from 15 BPS the prior week.

A 4-basis-point decline from the week ended Aug. 9 left 15-year fixed rates in Freddie’s survey at 4.01 percent. Fifteen-year rates were 52 BPS better than their 30-year counterparts. The spread thinned from 54 BPS in last week’s report.

Freddie reported that five-year, Treasury-indexed, hybrid adjustable-rate mortgages averaged 3.87 percent, a decline of 3 BPS.

The yield on the one-year Treasury note, which determines rate changes on hybrid ARMs, closed at 2.45 percent Thursday, Treasury Department data indicate. The one-year yield inched up a basis point from seven days earlier.

At 2.51 percent as of Wednesday, the six-month London Interbank Offered Rate was off a basis point from the preceding Wednesday, reported.

The Secured Overnight Financing Rate, which will eventually replace LIBOR, was reported by the Federal Reserve Bank of New York at 1.98 percent yesterday, soaring 10 BPS from
from the prior Wednesday.

ARM share in the most-recent Mortgage Market Index report was 16.2 percent, thinning from 17.4 percent in the preceding seven-day period.

Ellie’s data indicate that ARM share was 6.6 percent in July, thinning from 6.9 percent in June but widening from 5.7 percent in July 2017.

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