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Mortgage Rates Dip, Should Stay Down

Fixed mortgage rates slipped and aren’t expected to move much at least until 2018. Home loans for veterans have the lowest average rates.

Thirty-year interest rates on single-family loans that were closed during all of May 2017 had an average note rate of 4.33 percent.

Although the rate retreated from the prior month, when 30-year loans averaged 4.41 percent, it was higher than 4.06 percent one year prior.

The rates were reported by Ellie Mae Inc. in its May 2017 Origination Insight Report.

Conventional mortgages had an average rate of 4.41 percent last month, while loans insured by the Federal Housing Administration averaged just 4.29 percent. But mortgages guaranteed by the Department of Veterans Affairs had the lowest average rate: 4.07 percent.

Freddie Mac reported that 30-year fixed-rates averaged 3.90 percent in its Primary Mortgage Market Survey for the week ended June 22. The 30 year averaged slightly less than 3.91 percent the previous week but was still higher than 3.56 the same week in 2016.

A Mortgage Daily analysis of Treasury market activity suggests that fixed rates aren’t likely to be much different in the next report from Freddie, possibly a couple BPS lower.

Half of the panelists surveyed by the rate-tracking
website Bankrate.com for the week June 21 to June 27 agreed with Mortgage Daily and predicted rates won’t move more than 2 BPS. A third expected an increase, and just 17 percent projected a decline.

Fannie Mae predicted in its Housing Forecast: June 2017 that 30-year fixed rates will average 4.0 percent from the second-quarter 2017 to the first-quarter 2018.

The U.S. Mortgage Market Index report for the week ended June 16 from Mortgage Daily and Open Close had interest rates on jumbo mortgages 3 BPS higher than conforming rates. The jumbo-conforming spread thinned from 5 BPS the prior week but was unchanged from 3 BPS one year prior.

Fifteen-year fixed rates averaged 3.17 percent in Freddie’s survey, dipping form 3.18 percent in the week ended June 15.
Thirty-year rates were 73 BPS higher than 15-year rates, the same spread as a week ago.

Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.14 percent, slipping from 3.15 percent one week prior.

Hybrid ARMs are forecasted by Fannie to average 3.1 percent in the current quarter. They are then expected to average 3.2 percent each of the following two quarters.

At
1.22 percent as of Thursday, the yield on the one-year Treasury note — which serves as the index for hybrid ARMs — was slightly more than 1.21 percent seven days earlier, according to Treasury Department data.

The six-month  London Interbank Offered Rate, another ARM index, was 1.44 percent as of Wednesday, Bankrate.com reported. LIBOR was 1.42 percent the preceding Wednesday.

ARM share was 6.1 percent in May 2017, widening from 5.9 percent one month earlier, Ellie reported. ARM share was 4.5 percent one year earlier. ARM share was 7.5 percent on conventional loans, 0.5 percent on FHA transactions and 0.4 percent on VA mortgages.

ARM share in last week’s Mortgage Market Index report widened to 11.6 percent from 8.7 percent a week earlier

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