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Mortgage Rates Jump, Further Ascension Possible

Long-term interest rates on residential loans took a giant leap this past week, and there is a good chance that they will be even higher in the next report.

During the seven days that concluded on July 6, thirty-year fixed rates averaged 3.96 percent in the Primary Mortgage Market Survey from Freddie Mac.

Interest rates surged from one week prior, when the average was 3.88 percent, and one year prior, when long-term mortgage rates averaged 3.41 percent.

A written statement from MBSQuoteline Director of Sales and Marketing Joe Farr said that prices on mortgage-backed securities have worsened since Freddie conducted the survey — an indication that mortgage rates have risen even more.

A Mortgage Daily analysis of Treasury market activity indicates that fixed rates on single-family loans could be around 3 basis points worse in Freddie’s next survey.

But a majority of panelists surveyed by Bankrate.com for the week July 5 to July 11 predicted that mortgage rates won’t change over the next week. Forty-three percent expected an increase of at least 3 BPS, and nobody projected a decline.

The U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended June 30 indicated that interest rates on jumbo loans were 12 BPS more than conforming rates. The jumbo-conforming spread widened from 10 BPS the prior week.

Freddie’s survey had 15-year fixed rates averaging 3.22 percent this week, just 5 BPS worse than in the week ended June 29, 2017. The spread between 15- and 30-year mortgages widened to
74 BPS from the previous week’s 71 BPS.

Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.21 percent in the latest report,
climbing 4 BPS from last week.

The yield on the one-year Treasury note, which determines rate changes on hybrid ARMs,
closed Thursday at 1.23 percent, according to Treasury Department data. The one-year yield was unchanged from seven days earlier.

At 1.45 percent as of yesterday, the six-month London Interbank Offered Rate
was the same as last Wednesday, according to Bankrate.com.

ARMs made up 9.3 percent of all activity in the latest Mortgage Market Index report. ARM share widened from 8.9 percent one week earlier.

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