Fixed rates on residential loans improved over the past week. A key economic report this week, however, could cause rates to gyrate.
Thirty-year fixed rates averaged 3.91 percent in the Primary Mortgage Market Survey for the week ended Aug. 6 from Freddie Mac.
Prices on mortgage-backed securities have worsened around 40 BPS since Freddie surveyed lenders for the latest report, according to Joe Farr, director at MBSQuoteline.
“Since mortgage rates move inversely from MBS prices, mortgage rates have risen some since Monday, and the 3.91 percent rate as reported by Freddie Mac on Thursday is a little too low,” Farr said in a written statement.
Based on Mortgage Daily’s analysis of Treasury market activity, fixed rates are unlikely to be much different in Freddie’s next report.
But a majority of panelists surveyed by Bankrate.com for the week Aug. 6 to Aug. 12 predicted mortgage rates will increase at least three BPS over the next week. No change was forecasted by 36 percent of the panelists, and just nine percent expected a decline.
However, tomorrow’s employment report is likely to create volatility — and rates could rise if numbers are stronger than expected or fall if they come in weak.
Interest rates on jumbo mortgages were 18 BPS less than on conforming loans in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended July 31, narrowing from a negative 22-basis-point spread a week earlier.
Fifteen-year fixed rates averaged
3.13 percent in Freddie’s survey, four BPS less than in the week ended July 31. The spread between 15- and 30-year rates thinned to 78 BPS from 81 BPS a week earlier.
Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.95 percent, the same as in the last report.
One-year Treasury-indexed ARMs averaged 2.54 percent in Freddie’s survey, two BPS worse than seven days prior. The one year was down, however, from 2.98 percent in the week ended Aug 7, 2014.
The yield on the one-year Treasury note, which is used as an index for the one-year ARM, closed Thursday at 0.35 percent, lower than 0.36 percent one week prior, according to Treasury Department data.
Bankrate.com reported that the six-month London Interbank Offered Rate — or LIBOR — climbed to 0.49 percent as of Wednesday from 0.47 percent seven days earlier.
In the latest Mortgage Market Index report, ARM share was 9.8 percent, not as wide as 10.2 percent in the previous report.