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Mortgage Rates Rise, Further Increase Likely

Fixed mortgage rates ascended to the highest level since last year. Worse yet, they are likely to move even higher in next week’s report.

Freddie Mac reported in its Primary Mortgage Market Survey for the week ended March 9 that 30-year fixed rates averaged 4.21 percent.

In addition to rising 11 basis points from last week, the 30 year is at its highest level since it was 4.32 percent in the week ended Dec. 29, 2016.

MBSQuoteline Director Joe Farr said in a written statement to Mortgage Daily that prices on mortgage-backed securities have fallen since Freddie conducted its survey — an indication that interest rates on residential loans have increased around another 4.5 BPS as of today.

A Mortgage Daily analysis of Treasury market activity is pointing to fixed mortgage rates being around 7 BPS higher in Freddie’s next survey.

Seventy percent of the panelists surveyed by for the week March 2 to March 8 predicted that mortgage rates will increase at least 3 BPS during the next week. Thirty percent expected no change, and none projected a drop.

But a very weak jobs report Friday could put downward pressure on interest rates.

Freddie Mac Chief Economist Sean Becketti noted in the weekly survey report, “The strength of Friday’s employment report and the outcome of next week’s FOMC meeting are likely to set the direction of next week’s survey rate.”

Interest rates on jumbo mortgages were a basis point less than conforming rates in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended March 3.

In Freddie’s survey, 15-year fixed rates averaged 3.42 percent, worsening 10 BPS from the week ended March 2. The spread between 15- and 30-year rates
widened to 79 BPS from 78 BPS in the previous report.

Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.23 percent in Freddie’s report, leaping from 3.14 percent the prior week. reported that the six-month London Interbank Offered Rate — or LIBOR — was 1.42 percent as of Wednesday. LIBOR
jumped from 1.37 percent seven days earlier.

ARMs accounted for 10.4 percent of total activity in the latest Mortgage Market Index report, widening from a 7.8 percent ARM share the previous week.

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