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Mortgage Rates Remain Stable, No Change Likely

Again, there was little week-to-week movement in interest rates on home loans. The upcoming week is likely to continue the trend and see rates stay within a narrow range. Indices for adjustable-rate mortgages moved higher.

The average consumer who shopped at LendingTree for a mortgage to finance a home purchase was offered an average annual percentage rate of 4.99 percent during August. The average didn’t vary from the preceding month.

For the best borrowers, those who were in the 95th percentile, the average APR last month came to 4.32 percent. In July, the average APR for this group was 4.31 percent.

In its Primary Mortgage Market Survey for the week ended Sept. 6, Freddie Mac reported average 30-year fixed rates at 4.54 percent, up 2 basis points from the last report. The average was just 3.78 percent in the same seven days last year.

Sam Khater, Freddie’s chief economist, said in the report, “Borrowing costs may be slowly on the rise again in coming weeks, as investors remain optimistic about the underlying strength of the economy.”

Interest rates on residential loans are likely to remain near their current level in the next survey from Freddie, maybe a basis point or two lower, according to an analysis of Treasury market activity by Mortgage Daily.

But a majority of panelists surveyed by Bankrate.com for the week Sept. 5 to Sept. 11 disagreed with Mortgage Daily’s forecast and predicted rates will rise at least 3 BPS. A third saw no changes ahead, and just 8 percent projected a decline.

Jumbo rates in the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Aug. 31 were 11 BPS worse than conforming rates, thinning from 12 BPS a week prior.

With an average of 3.99 percent, fifteen-year fixed rates were 2 BPS higher than in the week ended Aug. 30, according to Freddie’s survey. The spread between 15- and 30-year rates was unchanged at 55 BPS.

Freddie reported that five-year, Treasury-indexed, hybrid ARMs averaged 3.93 percent this week, jumping 8 BPS from the preceding seven-day period.

Hybrid ARMs adjust according to the yield on the one-year Treasury note, which the Treasury Department reported climbed to 2.50 percent Thursday from 2.47 percent seven days earlier.

Other legacy ARMs are tied to the six-month London Interbank Offered Rate, which inched up to 2.54 percent Wednesday from
2.53 percent the previous Wednesday, Bankrate.com reported.

When LIBOR is retired, the
Secured Overnight Financing Rate will take its place. SOFR moved up to 1.95 percent Wednesday from 1.93 percent a week earlier, the Federal Reserve Bank of New York reported.

The Federal Home Loan Bank of San Francisco reported that the Cost of Funds Index
climbed to 1.018 percent in July from 0.934 percent in June.

ARM share in last week’s Mortgage Market Index report was 17.6 percent, the same as in the previous week.

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