Mortgage rates ascended during the past week, are still rising and are likely to be worse in next week’s report. But bad news out of Europe could change that outcome.
Home-loan interest rates were little changed over that past week, with the average 30-year fixed rate creeping up 2 basis points from a week earlier to 3.56 percent.
That was based on the Primary Mortgage Market Survey for the week ended June 23 from Freddie Mac, which indicated the 30 year was 4.02 percent a year earlier.
MBSQuoteline Director Joe Farr wrote in a statement to Mortgage Daily that prices on mortgage-backed securities have deteriorated slightly since Freddie surveyed lenders, indicating that mortgage rates have risen a little more.
In Freddie’s next survey, fixed rates might be around 5 BPS worse than this week based on a Mortgage Daily analysis of Treasury market activity.
A majority of panelists surveyed by Bankrate.com for the week June 23 to June 29 predicted that mortgage rates won’t be more than 2 BPS different next week. Another 36 percent projected an increase, and 9 percent expected a decline.
Bankrate.com Chief Financial Analyst said the direction of rates will depend on Great Britain’s vote on whether or not to leave the European Union.
“If the Brexit vote goes as expected, markets will breathe a sigh of relief and rates will tick higher,” McBride wrote in a statement to Mortgage Daily. “If, on the other hand, markets get surprised by a vote to exit the European Union, markets will freak out and mortgage rates will plunge.”
On a longer-term basis, Fannie Mae predicted in its
Housing Forecast: June 2016 that 30-year fixed rates will average 3.6 percent this quarter and in the third quarter then spend the next two quarters at 3.7 percent.
The Mortgage Bankers Association predicted in its MBA Mortgage Finance Forecast for June that the 30 year will climb from 3.6 percent in the second quarter to 3.9 percent three months later and 4.0 percent in the final quarter of 2016.
In the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended June 17, interest rates on jumbo mortgages were 3 BPS more than conforming rates, the same spread as a week prior.
Freddie’s survey indicated that 15-year fixed rates averaged 2.83 percent, also up 2 BPS from the previous survey. Interest rates on 15-year mortgages were 73 BPS less than 30-year rates. The spread
was no different than in the week ended June 16.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.74 percent in Freddie’s latest report, unchanged from a week prior.
Fannie expects hybrid ARMs to average 2.8 percent in the second quarter then rise 10 BPS each of the following three quarters.
One-year ARMs were reported by HSH.com at 2.61 percent as of Thursday, sinking from 2.83 percent seven days earlier. The one-year ARM averaged 2.50 percent in the week ended June 25, 2015, Freddie previously reported.
The one-year Treasury yield, which determines rate changes on one-year ARMs, closed at 0.58 percent as of Thursday, the Treasury Department reported. The one-year yield jumped from 0.53 percent a week prior.
Another ARM index, the six-month London Interbank Offered Rate — or LIBOR — was unchanged from a week earlier at 0.93 percent as of Wednesday, according to Bankrate.com.
ARMs accounted for 7.7 percent of all rate locks tracked in the latest Mortgage Market Index report. ARM share was modestly thinner than 7.9 percent the prior week.