Mortgage rates shot up to the highest level since the first week of the year thanks to the election, and a further increase could lie ahead in the next week.
During October, 30-year note rates averaged 3.76 percent, up from 3.75 percent the previous month when it was the lowest it’s been since May 2013.
But 30-year interest rates on residential loans have still improved compared to the same month last year, when the average note rate was 4.25 percent.
Those findings were derived from Ellie Mae Inc.’s Origination Insight Report | October 2016.
Last month’s average 30-year rate was
3.82 percent on conventional mortgages, 3.74 percent on loans insured by the Federal Housing Administration and 3.53 percent on mortgages guaranteed by the Department of Veterans Affairs.
In just the week ended Nov. 17,
thirty-year fixed rates averaged 3.94 percent — the highest average since it was 3.97 percent in the week ended Jan. 7 — according to Freddie Mac’s Primary Mortgage Market Survey.
The 30 year skyrocketed from 3.57 percent in Freddie’s prior report and 3.97 percent a year prior.
“Last week’s election fell in the middle of our survey week, making it impossible to determine how closely the mortgage rate would track the post-election sell-off in the Treasury market,” Freddie Mac Chief Economist Sean Becketti stated in the report. “This week, the verdict is in — over the last two weeks the 30-year mortgage rate jumped 40 basis points to 3.94 percent, almost identical to the 39 basis point increase in the 10-year Treasury yield.
“If rates stick at these levels, expect a final burst of home sales and refinances as ‘fence sitters’ try to beat further increases, then a marked slowdown in housing activity.”
MBSQuoteline Director Joe Farr said in a written statement to Mortgage Daily that mortgage rates have changed little since Freddie conducted its survey.
An analysis of Treasury market activity by Mortgage Daily suggests that fixed rates could be around 6 BPS higher in Freddie’s next survey.
But half of the panelists surveyed by Bankrate.com for the week Nov. 17 to Nov. 23 disagreed with Mortgage Daily’s forecast and predicted that mortgage rates will fall at least 3 BPS. Forty percent expected an increase, and 10 percent projected no change.
The Mortgage Bankers Association predicted in its
MBA Mortgage Finance Forecast that 30-year fixed rates will average 3.9 percent this quarter, 4.0 percent in the first-quarter 2017 and 4.1 percent the following quarter.
In the week that concluded on Nov. 11, the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily had jumbo interest rates 7 BPS higher than conforming rates, the same as one week prior.
Fifteen-year fixed rates averaged 3.14 percent in Freddie’s survey, soaring 26 BPS from the week ended Nov. 10, 2016. Rates on 15-year loans were
80 BPS lower than 30-year rates. The spread widened substantially from 69 BPS in the last report.
At 3.07 percent, five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 19 BPS more than the previous week, according to Freddie.
One ARM index, the yield on the one-year Treasury note, closed Thursday at 0.77 percent, according to the Department of the Treasury. The one-year yield rose from 0.72 percent seven days earlier.
Another ARM index, the six-month London Interbank Offered Rate, was reported by Bankrate.com at 1.27 percent as of Wednesday, inching up from 1.25 percent a week prior.
Ellie’s report indicated that ARM share was 4.0 percent
last month, the same as in September.
The most-recent Mortgage Market Index report had ARM share at 7.7 percent, wider than 6.9 percent one week earlier.