Prospective borrowers got an early Christmas gift as mortgage rates fell to the lowest levels ever recorded this week. But Treasury market activity points to higher rates in the next set of reports.
At 3.91 percent for the week ended Dec. 22, the average 30-year, fixed-rate mortgage was lower than ever previously recorded by Freddie Mac. It was also 3 basis points below last week and 90 BPS better than during the same week in 2010.
The 30-year mortgage averaged 4.40 percent last month, according to Freddie’s regulator, the Federal Housing Finance Agency. The 30 year averaged 4.36 percent in October.
It’s possible that the 30-year mortgage could rise 6 BPS by the next report from Freddie based on an analysis of Treasury market data. The yield on the 10-year Treasury note closed at 1.97 percent on Thursday, according to data from the Department of the Treasury, higher than the 1.91 percent average for Monday through Wednesday — when Freddie surveys its lenders.
But a majority of panelists surveyed by Bankrate.com for the week Dec. 22 to Dec. 28 don’t expect rates to move more than 2 BPS. However, a little less than a third predicted an increase and just 6 percent expected rates to fall.
The December housing forecast from Fannie Mae had the 30 year at 4.0 percent from this quarter through the third quarter of next year.
At the Mortgage Bankers Association, the fourth-quarter 30-year average is expected to come in at 4.2 percent then fall to 4.1 percent in the first half of next year.
Borrowers inquiring about mortgages in excess of $417,000 were quoted a rate that was 74 BPSÂ higher than conforming borrowers, according to the U.S. Mortgage Market Index report from Mortech Inc. and MortgageDaily.com for the week ended Dec. 16. The jumbo-conforming spread widened from 69 BPS in the prior report.
There was no change from the prior week in the average, 15-year, fixed-rate mortgage, which was reported by Freddie at a record-low 3.21 percent. Borrowers applying for a 15-year loan obtained rates that were 70 BPS better than 30-year borrowers, not as good as the 73-basis-point spread in the previous survey.
With a 1-basis-point drop since Freddie’s prior survey, the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaged 2.85 percent — the lowest ever recorded.
The one-year Treasury-indexed ARM averaged 2.77 percent in Freddie’s survey, the lowest level on record and 4 BPS less than last week. The one-year ARM averaged 3.40 percent this week last year.
Fannie predicts that the one year will average 2.9 percent this quarter and each of the first three quarters of 2012.
The Treasury Department reported that the yield on the one-year Treasury note closed today at 0.12 percent, the same as last Thursday.
There was no relenting for the six-month London Interbank Offered Rate, which Bankrate.com reported at 0.80 percent as of Dec. 21, up from 0.77 percent a week earlier. LIBORÂ has increased each week since Sept. 14, when it was 0.50 percent.
The share of inquiries in the latest Mortgage Market Index report that were for ARMs was 5.4 percent, lower than 6.2 percent in the prior report.
ARM share of loan applications was forecasted by Fannie to be 7 percent in the fourth quarter then fall to 6 percent for all of next year.
MBA, meanwhile, has the ARM share of originations at 4 percent in the second half of this year, 5 percent in the first-half 2012 and 6 percent in the second half of next year.
