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Fixed Mortgage Rates Dip Below 4%

Long-term interest rates on residential loans fell below four percent this week and might not move much in the next report.

In Freddie Mac’s Primary Mortgage Market Survey for the week ended July 30, thirty-year fixed rates averaged 3.98 percent.

The 30 year declined six basis points from the previous week and was 14 BPS better than in the same week last year.

Freddie Mac Chief Economist Sean Becketti explained that a decline in Chinese stock prices Monday triggered sell-offs in global equity markets and drove down Treasury yields.

“The mortgage rate has bounced between 3.98 and 4.09 percent since the first full week of June, falling a bit when events overseas take a turn for the worse and rising when the clouds appear ready to part,”
Becketti added. “With no clear direction coming from the Fed this afternoon, we expect more of the same in coming weeks.”

Joe Farr, director at MBSQuoteline, said Freddie’s
survey missed some unfavorable movement this week.

“As of Thursday, showing a drop in rates is appropriate, but not by as much as reported,” Farr said in a written statement.

Fixed rates aren’t likely to be a whole lot different, though maybe slightly higher, in Freddie’s next survey based on Mortgage Daily’s analysis of Treasury market activity.

A plurality of panelists surveyed by Bankrate.com for the week July 30 to Aug. 5 predicted an increase in mortgage rates of at least three BPS over the next week. Another third expected a decline, while less than a quarter projected no change.

Interest rates on jumbo mortgages were 22 BPS less than on conforming loans in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended July 24. The jumbo-conforming spread widened from 20 BPS seven days previous.

Fifteen-year fixed rates averaged
3.17 percent in Freddie’s latest survey, down four BPS from the week ended July 23. The spread between 15- and 30-year rates thinned to 81 BPS from 83 BPS in the last report.

Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.95 percent, off from 2.97 percent the previous week.

One-year ARMs averaged 2.52 percent in Freddie’s survey, down from 2.54 percent
a week earlier but worse than 2.38 percent in the week ended July 31, 2014.

The index for the one-year ARM, the one-year Treasury yield, closed Thursday at 0.36 percent, three BPS higher than seven days prior, according to data from the Department of the Treasury.

A less-utilized
ARM index, the six-month London Interbank Offered Rate — or LIBOR — was 0.47 percent as of Wednesday, unchanged from a week earlier, according to Bankrate.com.

ARMs accounted for 10.2 percent of all activity in the latest Mortgage Market Index report. ARM share widened from 10.0 percent the previous week.

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