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10-Year Yield At 13-Month Low

It’s been more than a year since the yield on the 10-year Treasury note has been this low, positioning fixed mortgage rates to wipe out the past week’s increase.

Freddie Mac’s Primary Mortgage Market Survey for the week ended Aug. 7 had 30-year fixed rates averaging 4.14 percent.

The 30 year was up 2 basis points from the prior report but has declined 26 BPS from the same week last year.

Fixed rates are positioned for a roughly 7-basis-point decline in Freddie’s next survey according to an analysis of this week’s Treasury market activity.

Data reported by the Department of the Treasury indicate that the yield on the 10-year Treasury note averaged 2.50 percent during the period that primary lenders were surveyed by Freddie. The 10-year yield closed at just 2.43 percent Thursday — the lowest it’s been since it stood at 2.41 percent on June 20, 2013.

However, more than two-thirds of panelists surveyed by for the week Aug. 7 to Aug. 13 predicted that mortgage rates won’t move more than 2 BPS over the next week. A quarter projected a decline, and just 8 percent forecasted an increase.

Jumbo mortgage rates in the U.S. Mortgage Market Index report from LoanSifter/Optimal Blue and Mortgage Daily for the week ended Aug. 1 were 11 BPS better than conforming rates, off from the negative 12-basis-point spread in the prior report.

In Freddie’s report, 15-year fixed rates averaged 3.27 percent, rising 4 BPS from the previous report. The spread between 15- and 30-year mortgages thinned to 87 BPS from 89 BPS in the week ended July 31.

Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.98 percent in Freddie’s survey, off from 3.01 percent seven days earlier.

At 2.35 percent, one-year Treasury-indexed ARMs were also down from Freddie’s last report, when the average was 2.38 percent. The one year was 27 BPS better than in the week ended Aug. 8, 2013.

One-year ARMs adjust based on changes to the one-year Treasury yield, which the Treasury Department reported at 0.11 percent Thursday, a basis point less than a week earlier.

Another ARM index, the six-month London Interbank Offered Rate, was 0.33 percent Wednesday, unchanged for the week, reported.

Of all the pricing inquiries tracked in the latest Mortgage Market Index report, ARMs made up 10.9 percent. ARM share inched up from 10.8 percent in the previous report.

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