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Mortgage Rates Retreat, VA Rates Lowest

An impressive improvement was reported for weekly mortgage rates. On a monthly basis, rates on residential loans for U.S. veterans were the lowest.

In June, thirty-year note rates on single-family loans averaged 4.27 percent, according to Ellie Mae Inc.’s June 2017 Origination Insight Report.

Mortgage rates deflated compared to the preceding month, when the average was 4.33 percent. But rates ascended from 3.97 percent the same month last year.

Thirty-year note rates averaged 4.34 percent on conventional mortgages last month. Rates on loans insured by the Federal Housing Administration averaged 4.25 percent, and the average was 4.01 percent on mortgages guaranteed by the Department of Veterans Affairs.

In Freddie Mac’s Primary Mortgage Market Survey for the week ended July 20, thirty-year fixed rates averaged 3.96 percent. The average improved by 7 BPS from the prior week.

“Continued economic uncertainty and weak inflation data pushed rates lower this week,” Freddie Mac Chief Economist Sean Becketti explained in the report.

Other factors that could have played a role in the volatile week were disappointment from the GOP’s inability to pass legislation and uncertainty from constant news reports about possible collusion with the Russians by members of the Trump administration

Long-term mortgage rates, though, were still significantly higher than 3.45 percent a year prior

A note from MBSQuoteline Director Joe Farr indicated that prices on mortgage-backed securities have improved since Freddie surveyed lenders earlier this week. The movement is an indication that mortgage rates have improved.

Fixed mortgage rates aren’t very likely to be much different in Freddie’s next survey based on an analysis of Treasury market activity by Mortgage Daily.

But half of the panelists surveyed by Bankrate.com for the week July 19 predicted rates will decline over the next week. A third expected an increase, and just 17 percent projected that rates won’t move more than 2 BPS.

Freddie’s secondary rival, Fannie Mae, predicted in its Housing Forecast: July 2017 that 30-year fixed rates will average 4.0 percent this quarter and 4.1 percent each of the following three quarters.

On jumbo mortgages, interest rates
were 10 BPS higher than on conforming loans, according to the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended July 14. The spread was more narrow than 17 BPS in the week earlier report.

At 3.23 percent in Freddie’s survey, 15-year fixed rates fell 6 BPS from the week ended July 13, 2017. Fifteen-year rates were 73 BPS better than 30-year rates, thinning from a 74-basis-point spread in the last report.

Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.21 percent, 7 BPS below the report from seven days ago.

Fannie expects hybrid ARMs to average 3.3 percent in each of the third and fourth quarters of this year and 3.4 percent in the first-quarter 2018.

Hybrid ARM rates adjust based on changes in the one-year Treasury note yield, which closed Thursday at 1.22 percent, according to Treasury Department data, a basis point lower than last Thursday.

At 1.46 percent as of Wednesday, the six-month London Interbank Offered Rate — or LIBOR — was no
different than as of seven days prior.

In the most-recent Mortgage Market Index report, ARM share was 9.8 percent, significantly widening from 7.3 percent one week earlier.

ARM share was 5.9 percent in June 2017, thinning from 6.1 percent the previous month, Ellie reported. ARM share was wider, though, than 4.8 percent in June 2016.

On conventional transactions, ARM share was 7.2 percent in June 2017, while it was just 0.5 percent on FHA mortgages and 0.2 percent on
VA loans.

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