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Mortgage Rates Up, Likely to Remain There

Fixed interest rates on single-family loans increased over the past week, and it is unlikely that they will retreat over the next week.

For the seven-day period that concluded on Oct. 5, thirty-year fixed rates averaged
3.85 percent in Freddie Mac’s Primary Mortgage Market Survey.

That turned out to be 2 basis points more than in the preceding week. Compared to the same week last year, the 30 year has soared 43 BPS.

Prices on mortgage-backed securities have declined since Freddie conducted its survey, according to MBSQuoteline Director of Sales and Marketing Joe Farr. As a result, interest rates on home loans have slightly increased.

Based on a Mortgage Daily analysis of Treasury market activity, interest rates on mortgages are unlikely to be much different in Freddie’s next survey.

Sixty-two percent of the panelists surveyed by for the week Oct. 4 to Oct. 11 agreed with Mortgage Daily’s forecast and predicted mortgage rates won’t move over the next week. An increase of at least 3 BPS was projected by 23 percent, and just 15 percent expected by a decline.

In the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Sept. 29, jumbo interest rates were 14 BPS more than conforming rates, widening from an 11-basis-point spread the previous week.

Freddie reported that 15-year fixed rates averaged
3.15 percent. Like the 30 year, 15-year rates moved up 2 BPS from the week ended Sept. 28. As a result, the spread between 15- and 30-year rates remained at 70 BPS.

3.18 percent, Treasury-indexed, hybrid, adjustable-rate mortgages were 2 BPS lower than in the last report, according to Freddie.

Hybrid ARMs adjust based on the one-year Treasury note yield, which closed today at 1.33 percent, up 2 BPS from last Thursday, Treasury Department data indicate.

Some legacy ARMs are tied to the six-month London Interbank Offered Rate, which was 1.52 percent as of Wednesday, according to LIBOR was also up 2 BPS from seven days earlier.

Another index used for some legacy ARMs is the 11th District Cost of Funds Index, which the Federal Home Loan Bank of San Francisco reported at 0.732 percent for August, up from 0.707 percent the prior month.

ARM share in the most-recent Mortgage Market Index report widened to 16.1 percent from 12.0 percent a week earlier.

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