Fixed rates on residential loans rose this past week. The increase, however, was more pronounced on longer-term loans than on 15-year mortgages — making the shorter term more attractive.
Thirty-year fixed rates averaged 4.08 percent in the Primary Mortgage Market Survey from Freddie Mac for the week ended July 2.
Historical data from the secondary lender indicate that 30-year fixed mortgage rates
haven’t been this high since the week ended Oct. 9, when the average was 4.12 percent.
“Overseas events are generating significant day-to-day volatility in interest rates … Other measures, however, confirmed continued strength in housing — pending home sales rose 0.9 percent, exceeding expectations, and the Case-Shiller house price index recorded another solid increase,” Freddie Mac Chief Economist Sean Becketti said in the report.
Joe Farr, director at MBSQuoteline, explained in a written statement that rates have improved today on a disappointing employment report.
“The rate reported by Freddie Mac is a pretty good reflection of where rates actually are on Thursday,” Farr said.
Mortgage Daily’s analysis of Treasury market activity indicates that fixed mortgage rates are likely to be little changed to minimally higher in Freddie’s next survey.
A majority of panelists surveyed by Bankrate.com for the week July 2 to July 8 predicted mortgage rates will rise at least three BPS during the next week. A third forecasted no change, and just eight percent predicted a decline.
The Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended June 26 indicated that interest rates on jumbo loans were seven BPS less than conforming rates.
Freddie’s survey said that 15-year fixed rates
inched up three BPS from last week to 3.24.
The spread between long- and short-term rates widened to 84 BPS from 81 BPS in the last report. The widening gap between 15- and 30-year rates makes the economics of the shorter term more viable.
A one-basis-point increase over the past seven days left five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 2.99 percent in Freddie’s report.
One-year Treasury-indexed ARMs averaged 2.52 percent, Freddie said, up from 2.50 percent a week earlier and 2.38 percent a year earlier.
The one-year Treasury yield, which determines rate and payment changes on one-year ARMs, fell to 0.26 percent Thursday from 0.29 percent seven days prior, according to Treasury Department data.
An index that is utilized on some subprime ARMs, the six-month London Interbank Offered Rate — or LIBOR — was 0.44 percent as of Wednesday, Bankrate.com reported. There was no change from one week previous.
ARMs accounted for 8.5 percent of all activity in the latest Mortgage Market Index report.