Mortgage rates, which seem to be currently focused on the federal government shutdown, inched up for the first time in more than a month and could accelerate.
For the first time in five weeks, average rates on fixed-rate 30-year mortgages moved higher — to 4.23 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Oct. 10 from 4.22 percent seven days earlier.
The 30 year has substantially increased from a year earlier, when Freddie’s weekly survey indicated that it averaged only 3.39 percent.
“Mortgage rates were little changed amid the federal debt impasse in Washington, D.C., and a light week of economic data releases,” Freddie Mac Chief Economist Frank Nothaft explained in the report. “Of the few releases, the private sector added an estimated 166,000 jobs in September, which were fewer than the market consensus and followed a downward revision of 17,000 workers in August, according to the ADP Research Institute. The Institute for Supply Management reported a greater slowing in growth in the non-manufacturing industry in September than the market consensus forecast.”
But stiff partisan differences appeared to be softening on Thursday — invigorating investors, pushing the Dow Jones Industrial Average up 323 points and driving bond prices lower.
A Mortgage Daily analysis of this week’s Treasury market activity has mortgage rates heading around 5 BPS higher by Freddie’s next report.
During the days that Freddie surveyed primary lenders for this week’s report, the 10-year Treasury yield averaged 2.66 percent, while it closed at 2.71 percent Thursday, according to Treasury Department data.
However, given that the federal budget impasse is still not resolved, markets remain volatile and rates could behave erratically.
Half of this week’s Bankrate panelists predicted that mortgage rates won’t move more than 2 BPS over the next week or so. Another 42 percent projected a decline, and just 8 percent forecasted an increase.
The National Association of Federal Credit Unions forecasts that 30-year rates will average 4.5 percent for all of 2013 and 5.0 percent next year.
The spread between conforming and jumbo mortgages was just over 31 BPS in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended Oct. 4. The jumbo-conforming spread was little changed from seven days prior, when it was just under 31 BPS.
A 2-basis-point rise from the week ended Oct. 3 left 15-year fixed-rate mortgages averaging 3.31 percent in Freddie’s report. Rates on 15-year loans were 92 BPS higher than on 30-year mortgages compared to a 93-basis-point spread last week.
The NAFCU forecast has 15-year mortgages averaging 3.5 percent in 2013 and 4.0 percent in 2014.
Freddie said the average for five-year, Treasury-indexed, hybrid, adjustable-rate mortgages rose to 3.05 percent from the previous week’s 3.03 percent.
One-year Treasury-indexed ARMs averaged 2.64 percent, 1 basis point more than in the previous report and 5 BPS worse than in Freddie’s survey for the week ended Oct. 11, 2012.
The underlying index for the one-year ARM, the yield on the one-year Treasury note, soared to 0.14 percent today from 0.11 percent a week earlier, according to the Treasury Department.
No change was reported from last week by Bankrate.com for the six-month London Interbank Offered Rate, which was 0.37 percent Wednesday.
ARM share was lower in the latest Mortgage Market Index report, retreating to 9.8 percent from the previous week’s 10.6 percent.
