Mortgage Daily

Published On: January 18, 2018

The latest reading on mortgage rates is that they continued deteriorating on both a weekly and monthly basis. Short- and long-term forecasts have further escalation ahead for fixed rates.

On all residential loans that closed during December, thirty-year note rates
averaged 4.28 percent. The rate climbed 4 basis points from the prior month — when they were also higher  — and 23 BPS from a year prior.

Rates most recently averaged 4.32 percent on conventional mortgages, 4.31 percent on loans insured by the Federal Housing Administration and 4.05 percent on loans guaranteed by the Department of Veterans Affairs.

Ellie Mae Inc. reported the rates in its Origination Insight Report | December 2017.

During just the seven days ended Jan. 18, thirty-year fixed rates averaged 4.04 percent — the highest average since they were 4.05 percent in the week ended May 11, 2017 — according to Freddie Mac’s Primary Mortgage Market Survey. The average rose 5 BPS from the preceding survey but was 5 BPS less than the same week in 2017.

“Some may be wondering if this is the last time we’ll see a three handle on the 30-year mortgage rate,” Freddie Mac Deputy Chief Economist Len Kiefer said in the report. “Never say never, but inflation is firming, the Federal Reserve’s Beige Book indicates broad-based economic growth and labor markets are tightening. This means upward pressure on long-term rates, like the 30-year fixed-rate mortgage, is building.”

Mortgage Daily’s analysis of Treasury market activity suggests that fixed mortgage rates could be around 7 BPS worse in Freddie’s next survey.

Nearly half of the panelists surveyed by Bankrate.com for the week Jan. 17, to Jan. 23 predicted no changes over the next week for mortgage rates. A third expected an increase of at least 3 BPS, and a fifth projected a decline.

Freddie predicted in its January 2018 Economic & Housing Market Forecast that 30-year fixed rates will average 4.1 percent this quarter, 4.4 percent in the second quarter and 4.6 percent during the following three months.

In the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Jan. 12, jumbo interest rates were 29 BPS higher than conforming rates, widening from 22 BPS the prior week.

Fifteen-year fixed rates averaged 3.49 percent in Freddie’s survey, a 5-basis-point increase from the week ended Jan. 11, according to Freddie. The spread between 15- and 30-year rates was 55 BPS, the same as a week earlier.

At 3.46 percent in Freddie’s survey, five-year, Treasury-indexed, hybrid adjustable-rate mortgages were unchanged from the last report.

Freddie’s forecast has hybrid ARMs averaging 3.6 percent in the first quarter, 3.9 percent three months later, and 4.1 percent in the third quarter.

The yield on the one-year Treasury note, which is utilized to determine rate changes for hybrid ARMS, rose to 1.79 percent Thursday from 1.77 percent seven days earlier, according to Treasury Department data.

At 1.90 percent as of Wednesday, the
six-month London Interbank Offered Rate was 3 BPS higher than the previous Wednesday, according to Bankrate.com.

ARM share in the most-recent Mortgage Market Index report was 13.6 percent, much wider than 10.7 percent during the preceding seven-day period.

Ellie’s data indicate that ARM share was 5.6 percent last month, no different than in November but wider than 4.6 percent in December 2016.

December 2017’s ARM share was 6.3 percent on conventional loans, 0.6 percent on FHA mortgages and 0.2 percent on VA transactions.

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