Mortgage Daily

Published On: January 10, 2013

Longer-term fixed rates moved up more this week than shorter-term rates. All signs point to little movement in fixed rates over the next seven days. While hybrid adjustable-rate mortgages were lower, the one-year ARM increased.

A 6-basis-point jump from last week left the 30-year, fixed-rate mortgage averaging 3.40 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Jan. 10. The average 30 year was 49 BPS better than the same week during 2012.

Rates rose following Friday’s favorable employment report, according to Freddie Mac Chief Economist Frank Nothaft.

Mortgage rates are unlikely to be much different in Freddie’s next report based on Mortgage Daily’s analysis of this week’s Treasury market activity.

Data reported by the Department of the Treasury indicate that the yield on the 10-year Treasury note averaged 1.90 percent during the days that Freddie surveyed lenders for the latest report. The 10-year yield closed at 1.91 percent Thursday.

Also expecting no changes in mortgage rates over the next week were more than two thirds of Bankrate.com panelists for the week Jan. 10 to Jan. 16. A quarter predicted a decline of at least 3 BPS, and only 8 percent forecasted a rise.

In the U.S. Mortgage Market Index report from Optimal Blue and Mortgage Daily for the week ended Jan. 4, jumbo mortgages were priced at a 31-basis-point premium over conforming rates, the same as the previous week.

At 2.66 percent, the average 15-year, fixed-rate mortgage was just 2 BPS worse than the week ended Jan. 3. The more favorable movement for the shorter-term mortgage increased the spread between 15- and 30-year mortgages to 74 BPS from only 70 BPS in the previous report.

A decline of 4 BPS was reported by Freddie for the five-year, Treasury-indexed, hybrid ARM, which averaged 2.67 percent in the current report.

Freddie said that the average one-year Treasury-indexed ARM moved up to 2.60 percent from 2.57 percent seven days earlier. The one year averaged 2.76 percent in the week ended Jan. 12, 2012.

One-year ARM borrowers could benefit from a recent decline in the ARM index, the yield on the one-year Treasury note. The Treasury Department reported the one-year Treasury yield at 0.14 percent as of Thursday, down from 0.15 percent a week earlier.

The one-year Treasury yield wasn’t the only ARM index to retreat; the six-month London Interbank Offered Rate was also lower. Bankrate.com reported that LIBOR fell to 0.50 percent Wednesday from 0.51 percent a week earlier.

Nearly 3 percent of rate locks tracked in the latest Mortgage Market Index report were for ARMs. A week prior, ARM share was less than 2.5 percent.

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