Mortgage Daily Logo
mortgage news from industry experts

Mortgage Rates Set to Rise, But Volatile

Although market indicators point to higher mortgage rates, an economic report scheduled for release tomorrow could alter that outlook.

There was little change this week with 30-year fixed rates, which averaged 4.12 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended July 31.

Average 30-year rates were 4.13 percent seven days earlier. In the same report from 12 months earlier, the 30 year averaged 4.39 percent.

Freddie’s regulator, the Federal Housing Finance Agency, reported that conventional conforming 30-year rates averaged 4.34 percent in June, 3 BPS better than in May.

Interest rates on home loans are likely to increase approximately 7 basis points in Freddie’s next survey based on Treasury market activity.

Data from the Department of the Treasury indicate that the 10-year Treasury note yield — a barometer for fixed mortgage rates — averaged 2.51 percent during the period covered by Freddie’s survey, while it closed at 2.58 percent on Thursday.

Freddie’s chief economist, Frank Nothaft, noted in the survey that the 10-year Treasury yield surged on Wednesday as gross domestic product for the second quarter came in above expectations at a 4.0 percent annualized rate.

Also impacting the 10-year yield was a statement Wednesday from the Federal Open Market Committee indicating that it would add to its agency mortgage-backed securities investments at a monthly pace of $10 billion starting next month versus the $15 billion pace in place now.

An overwhelming majority of panelists surveyed by Bankrate.com for the week July 31 to Aug. 6 predicted mortgage rates won’t move more than 2 BPS over the next week. Just 18 percent expected an increase, and none expected a decline.

However, mortgage rates will be volatile because of Friday’s U.S. employment report. An increase of more than 250,000 jobs could push rates higher, while fewer than 200,000 jobs added might place downward pressure on yields.

The jumbo-conforming spread in the U.S. Mortgage Market Index report from LoanSifter/Optimal Blue and Mortgage Daily for the week ended July 25 was a negative 12 BPS, widening from a negative 11 BPS in the previous report.

A slightly bigger decline than reported for 30-year fixed rates was recorded for 15-year mortgages, which Freddie reported at 3.23 percent versus 3.26 percent in the week ended July 24. As a result, the spread between 15- and 30-year mortgages widened to 89 BPS from 87 BPS in the previous report.

Freddie’s survey indicated that a 2-basis-point increase occurred for five-year, Treasury-indexed, hybrid, adjustable-rate mortgages, which averaged 3.01 percent in the latest report.

One-year Treasury-indexed ARMs slipped a single basis point from seven days prior to 2.38 percent and were 26 BPS better than in Freddie’s survey for the week ended Aug. 1, 2013.

The index utilized for one-year ARMs, the yield on the one-year Treasury note, rose to 0.12 percent today from 0.11 percent last Thursday, the Treasury Department reported.

The six-month London Interbank Offered Rate, which is used as an index for some ARMs, was 0.33 percent as of Wednesday, the same as one week earlier.

ARM share in the most recent Mortgage Market Index report fell to 10.8 percent from 11.2 percent in the previous report.

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts

THE TRUSTED PROVIDER OF ACCURATE RATES AND FINANCIAL INFORMATION