While interest rates on home loans barely moved this week, fixed rates crept higher and short-term adjustable rates slipped.
There was little change from a week ago for 30-year fixed rates, which inched up 1 basis point to 4.48 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Dec. 26.
Mixed economic reports held fixed rates in check, according to Freddie Mac Chief Economist Frank Nothaft. He said real gross domestic product was revised up to 4.1 percent in the third quarter, but existing home sales were 4.3 percent worse in November and the annual rate for new home sales declined 2.1 percent.
Historical data from the government-controlled secondary lender indicate that 30-year fixed rates averaged just 3.35 percent one year earlier.
During November, rates on conventional 30-year were 4.38 percent, down 11 BPS from October, the Federal Housing Finance Agency reported. FHFA regulates Freddie and its secondary cousin Fannie Mae.
Next week’s report is likely to reflect rates that are near this week’s levels, according to an analysis of this week’s Treasury market activity.
Treasury Department data indicate that the yield on the 10-year Treasury note averaged 2.97 percent during the period covered by Freddie’s most recent survey. The 10-year yield closed at 3.00 percent Thursday.
An equal share — 43 percent — of panelists surveyed by Bankrate.com for the week Dec. 26 to Jan. 2 believe that fixed rates will either go up or stay within 2 BPS of their current levels. Just 14 percent forecasted a drop.
Fannie predicts that 30-year fixed rates will average 4.3 percent in the fourth quarter, 4.5 percent in the first quarter of next year and 4.6 percent in the following quarter.
The fourth-quarter outlook from the Mortgage Bankers Association is for 30-year rates to be 4.4 percent, then jump to 4.7 percent in the first three months of 2014 and rise to 4.8 percent three months later.
Jumbo mortgages were priced at a 22-basis-point premium in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended Dec. 20, better than the prior week’s 35-basis-point jumbo-conforming spread.
A 1-basis-point rise from the week ended Dec. 19 was reported by Freddie for 15-year fixed rates, which averaged 3.52 percent this week. Fifteen-year borrowers received rates that were 96 BPS lower than for 30-year borrowers, the same spread as in the previous report.
Freddie said five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.00 percent, rising from 2.96 percent in the previous report.
Fannie projects that five-year hybrids will move from 3.0 percent in the fourth-quarter 2013 to 3.1 percent in the following period than rise to 3.4 percent in the second-quarter 2014.
One-year Treasury-indexed ARMs averaged 2.56 percent in Freddie’s survey, a basis point less than in the previous report. One-year ARMs were unchanged from the week ended Dec. 27, 2012.
The outlook from Fannie is for one-year ARMs to average 2.6 percent this quarter, 2.7 percent three months later and 2.9 percent in the second quarter of next year.
The yield on the one-year Treasury note closed Today at 0.13 percent, the same as a week earlier, according to the Treasury Department data.
Another ARM index, the six-month London Interbank Offered Rate — or LIBOR — was 0.35 percent Wednesday, the same as a week earlier.
ARMs accounted for 11.2 percent of activity in the most recent Mortgage Market Index report.
Fannie expects ARM share to be 8 percent in this and the next quarters then jump to 10 percent in the second quarter of next year.