Fixed rates on home loans were little changed over the past week, but a significant drop is likely in the next report.
There was barely any movement this week with 30-year fixed rates, which slipped to 4.20 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday from 4.21 percent last week.
But 30-year mortgage rates have seen significant movement compared to the same week in 2013, when the average was 3.51 percent.
Fixed rates are poised to drop another 10 basis points or so in Freddie’s next report based on Treasury market activity.
Treasury Department data indicate that the yield on the 10-year Treasury note — a benchmark for fixed mortgage rates — averaged 2.60 percent during the period Freddie surveyed lenders this week, while it closed at 2.50 percent Thursday.
But a majority of Bankrate.com panelists for the week May 15 to May 21 predicted no changes during the next week for mortgage rates. A quarter forecasted an increase of at least 3 BPS, and just 13 percent saw a decline ahead.
Jumbo loans were priced 5 BPS better than their conforming counterparts in the U.S. Mortgage Market Index report from LoanSifter-Optimal Blue and Mortgage Daily for the week ended May 9. The spread widened from a negative 1 basis point a week earlier.
Fifteen-year mortgage rates averaged 3.29 percent in Freddie’s survey, 3 BPS lower than in the report for the week ended May 8. Borrowers opting for 15-year mortgages had rates that were 91 BPS better than 30-year rates, better than the 89-basis-point spread in place last week.
Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.01 percent, 4 BPS less than a week earlier.
One-year Treasury-indexed ARMs averaged 2.43 percent in Freddie’s report, the same as in the last report. One-year ARMs averaged 12 BPS less than they did in the week ended May 16, 2013.
Treasury data indicate that the index for the one-year ARM, the yield on the one-year Treasury note, slipped to 0.09 percent Thursday from 0.10 percent seven days earlier.
No change from the previous week left the six-month London Interbank Offered Rate at 0.32 percent as of Wednesday, according to Bankrate.com.
ARMs accounted for 13.2 percent of all activity in the latest Mortgage Market Index report, down from ARM share of 12.9 percent the prior week.