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Mortgage Rates Up, Outlook Hinges on Jobs Report

Weekly mortgage rates moved modestly higher this past week. While signs point to little change ahead — tomorrow’s jobs report could change that.

For the entire month of July, fixed interest rates on conventional
30-year mortgages used to finance a house purchase averaged 3.80 percent.

The Federal Housing Finance Agency, which reported the average based on conforming loan amounts, said the rate sank from 3.88 percent in June.

3.46 percent, 30-year fixed rates in just the week ended Sept. 1 were 3 basis points higher than in the prior seven-day period.

That was according to Freddie Mac’s Primary Mortgage Market Survey, which had 30-year rates at 3.89 percent as of a year prior.

Freddie Mac Chief Economist Sean Becketti explained that rates initially worsened in response to Federal Reserve Board Chair Janet Yellen’s speech last Friday, though they subsequently settled slightly lower.

Mortgage Daily’s analysis of Treasury market data indicates that fixed rates are unlikely to be much different in Freddie’s next survey.

Eighty-eight percent of panelists surveyed by for the week Aug. 31 to Sept. 6 agreed with Mortgage Daily’s forecast and expect rates to remain within 2 BPS of their current level. Just 13 percent predicted an increase, and none expected a decline.

But mortgage rates are vulnerable to tomorrow’s employment report, according to Chief Financial Analyst Greg McBride.

“A strong jobs report may not cement a September interest rate hike but raises the odds of one in December, which would push mortgage rates up a bit,” McBride said in a written statement to Mortgage Daily.

In the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Aug. 26, jumbo rates were 7 BPS higher than conforming rates. The jumbo-conforming spread narrowed from 10 BPS the previous week.

Fifteen-year rates averaged 2.77 percent in Freddie’s survey, 3 BPS more than in the week ended Aug.
25. There was no change from the previous survey for the spread between 15- and 30-year mortgages, which was 69 BPS.

Freddie reported that five-year, Treasury-indexed, hybrid,
adjustable-rate mortgages averaged 2.83 percent in the most-recent report, 8 BPS more than in the report from seven days earlier.

Rates on Treasury-indexed one-year ARMs were 2.81 percent as of Sept. 1, climbing from 2.64 percent the prior Thursday, reported.

Freddie previously reported that one-year ARMs averaged 2.62 percent in the week ended Sept. 3, 2015.

Data from the Department of the Treasury indicate that the yield on the one-year Treasury note, which serves as the index for one-year ARMs, closed at 0.60 percent Thursday, the same as seven days earlier.

A less-utilized ARM index, the six-month London Interbank Offered Rate, was 1.24 percent as of Wednesday, reported. LIBOR inched up a basis point from one week prior.

The most-recent Mortgage Market Index report had ARM share at 5.0 percent, thinning from 7.3 percent a week earlier.

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