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Rates Creep Up, Could Keep Climbing

Mortgage rates had a slight bounce this week and are on a trajectory to move even higher, though a weak employment report could change that.

At 4.41 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday, 30-year fixed rates averaged 1 basis point more than a week earlier.

The year-over-year change was far greater, with the average 30 year climbing 87 BPS from the same week in 2013.

“Mortgage rates were little changed amid a week of light economic reports,” Frank Nothaft, chief economist at the secondary lender, said in the announcement. “Of the few releases, real GDP was revised up slightly to 2.6 percent growth in the fourth quarter of 2013. The private sector added an estimated 191,000 jobs in March, which followed an upward revision of 39,000 jobs in February according to the ADP Research Institute. Also, the Institute for Supply Management reported the manufacturing industry rebounded from a soft February but was still below market consensus.”

Thirty-year rates are positioned to be around 8 BPS worse in the next report from Freddie based on this week’s Treasury market activity.

At 2.82 percent, the yield on the 10-year Treasury was higher than the 2.74 percent average during the period Freddie surveyed lenders.

Half of all panelists surveyed by for the week April 3 to April 9 predicted mortgage rates won’t move more than 2 BPS over the next week. The rest were evenly split over whether rates would rise or fall.

All bets are off, however, if tomorrow’s employment report is weak. Lately, fewer than 150,000 jobs added during a given month represents a weak showing.

While Nothaft cited ADP’s 191,000 job gain figure, ADP’s numbers have been known vary widely from Department of Labor statistics.

Jumbo mortgage rates were priced just 3 BPS higher than conforming rates in the week ended March 28, according to the Mortgage Market Index report from LoanSifter and Mortgage Daily. The jumbo-conforming spread was more narrow than 5 BPS in the previous report.

Freddie said 15-year fixed rates averaged 3.47 percent, 5 BPS worse than in the week ended March 27. The spread between 15- and 30-year rates fell to 94 BPS from 98 BPS in the prior report. The smaller rate discount made 15-year mortgages less attractive.

A 2-basis-point gain from Freddie’s prior report left five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 3.12 percent.

One-year Treasury-indexed ARMs averaged 2.45 percent, a basis point worse than last week. One-year ARMs averaged 2.63 percent in the week ended April 4, 2013.

Treasury Department data indicate that the index on the one-year ARM, the yield on the one-year Treasury note, was unchanged from a week earlier at 0.12 percent Thursday.

No change also in the six-month London Interbank Offered Rate left it at 0.33 percent a of Wednesday, reported.

ARM share ticked up to 13.9 percent in the latest Mortgage Market Index report from 13.7 percent seven days earlier.

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