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7-Year High for Mortgage Rates

Interest rates on home loans continued to ascend on both a weekly and monthly basis, climbing to a seven-year high. Two out of three indices used for adjustable-rate mortgages didn’t change.

On conforming residential loans that were used to finance a home purchase, 30-year fixed rates averaged 4.78 percent during August, the Federal Housing Finance Agency reported.

The average, which was determined based on a small survey of primary mortgage lenders by FHFA, increased by just a single basis point versus July.

But compared to the same month last year, the average has soared by 59 BPS.

During just the seven days that concluded on Sept. 27, Freddie Mac’s Primary Mortgage Market Survey for the week ended Sept. 27 averaged 4.16 percent — the highest level since it was 4.78 percent in the week ended April 28, 2011.

Long-term rates jumped 7 BPS from the preceding week, marking the fifth consecutive week of increasing rates, and have skyrocketed 89 BPS from a year previous.

“The robust economy, rising Treasury yields and the anticipation of more short-term rate hikes caused mortgage rates to move up,” Freddie Mac Chief Economist Sam Khater stated in the report.

Mortgage Daily’s analysis of Treasury market activity suggests that fixed rates in Freddie’s next survey will be about the same as this week, maybe a couple BPS less.

For the week
Sept. 26 to Oct. 2, a majority of panelists surveyed by Bankrate.com predicted mortgage rates will fall at least 3 BPS over the next week. An increase was expected by 36 percent, and 9 percent forecasted no change.

Thirty-year fixed rates during the third quarter, which ends Sunday, are expected to average
4.6 percent then rise 10 BPS each of the next three quarters in the Mortgage Bankers Association’s MBA Mortgage Finance Forecast.

Interest rates on jumbo mortgages were 16 BPS higher than conforming rates in the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Sept. 21. The spread was a bit wider than 15 BPS the prior week.

In Freddie’s survey, 15-year fixed rates climbed to 4.16 percent from 4.11 percent. The disparate rise between 15- and 30-year rates pushed the spread between the two products to 56 BPS from 54 BPS.

Five-year, Treasury-indexed, hybrid adjustable-rate mortgages averaged 3.97 percent, 5 BPS worse than in Freddie’s last report.

At 2.58 percent as of Thursday, the index for hybrid ARMs — the yield on the one-year Treasury note — was
the same as the preceding Thursday, according to Treasury Department data.

But another ARM index, the six-month London Interbank Offered Rate, or LIBOR, climbed to 2.59350 percent Wednesday from 2.57175 percent seven days earlier.

The Secured Overnight Financing Rate, which is replacing LIBOR, was 1.92 percent as of yesterday, no different than the previous Wednesday.

The most-recent Mortgage Market Index report had ARM share at 18.5 percent, not as wide as 22.5 percent the prior week.

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