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Mortgage Rates Surge

Signs of strength in the U.S. economy helped drive mortgage rates higher this week. Long-term fixed rates jumped more than 10 basis points, while adjustable-rate loans rose more moderately.

An 11-basis-point rise from last week left fixed-rate 30-year mortgages averaging 3.53 percent in the Primary Mortgage Market Survey for the week ended Jan. 24 from Freddie Mac. The 30 year was 34 BPS better, however, than the same week last year.

Freddie Mac Chief Economist Frank Nothaft attributed the rate increase to a growing economy led, at least partially, by a housing recovery.

Thirty-year mortgages fell to 3.47 percent in December from 3.54 percent in November, according to the Federal Housing Finance Agency.

Mortgage rates are unlikely to be much different in Freddie’s next report based on a Mortgage Daily analysis of Treasury market activity for this week. The yield on the 10-year Treasury note averaged 2.02 percent during the period that Freddie surveyed lenders for this week’s report, according to Treasury Department data. The yield on the 10-year Treasury closed at 2.02 percent Thursday.

While 40 percent of the panelists surveyed by Bankrate.com for the week Jan. 31 to Feb. 6 predicted rates will rise at least 3 BPS, the same share speculated that a decline was ahead. Just a fifth see no changes coming.

Jumbo mortgages were priced at a 26-basis-point premium over conforming loans in the U.S. Mortgage Market Index report from Optimal Blue and Mortgage Daily for the week ended Jan. 25, improving from the previous week’s 30 BPS.

A 10-basis-point increase from the week ended Jan. 31 had the 15-year fixed-rate mortgage averaging 2.81 percent. The discount for a shorter term loan increased to 72 BPS from a 71-basis-point spread last week.

Freddie reported that the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaged 2.70 percent, 3 BPS worse than in the previous survey.

The one-year, Treasury-indexed ARM averaged 2.59 percent in Freddie’s survey, up 2 BPS from a week earlier but 10 BPS better than the week ended Feb. 2, 2012.

No change over the past week was reported by the Department of the Treasury in the one-year Treasury note yield, which closed today at 0.15 percent.

Another ARM index, the six-month London Interbank Offered Rate, was 0.48 percent Wednesday, according to Bankrate.com.

ARM share slipped from 3.3 percent seven days prior to 3.2 percent in the latest Mortgage Market Index report.

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