Long-term fixed rates rose this week but could retreat by the time next week’s report is released. Short-term fixed rates and hybrid adjustable-rate mortgages didn’t move, while the one-year ARM was higher.
A 3-basis-point rise from last week left the 30-year fixed-rate mortgage averaging 3.56 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Feb. 21. The 30 year, however, was still much better than 3.95 percent in the same week during 2012.
Mortgage rates could be a little lower next week based on a Mortgage Daily analysis of this week’s Treasury market activity.
During the days that Freddie surveyed mortgage lenders for this week’s report, the 10-year Treasury yield averaged 2.03 percent, according to data from the Department of the Treasury. But the 10-year yield fell to 1.99 percent Thursday.
A majority of panelists surveyed this week by Bankrate.com predicted that rates won’t move more than 2 BPS over the next week. A quarter predicted an increase, and just 17 percent expected rates to fall.
Fannie Mae predicts that 30-year mortgages will average 3.5 percent this quarter then rise 20 BPS each quarter until the first quarter of next year.
Jumbo mortgages were priced at a 16-basis-point premium to conforming loans in the U.S. Mortgage Market Index from Optimal Blue and Mortgage Daily for the week ended Feb. 15, improving from the 22-basis-point spread in the previous report.
Freddie’s report indicated that the average 15-year fixed-rate mortgage was unchanged from the week ended Feb. 14 at 2.77 percent. The shorter term was more attractive this week, with the spread between 15- and 30-year mortgages widening to 79 BPS from the previous week’s 76 BPS.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.64 percent in Freddie’s survey, unchanged from seven days prior.
A 4-basis-point rise from Freddie’s prior survey left the one-year Treasury-indexed ARM at 2.65 percent. The one year remains lower, however, than 2.73 percent in the week ended Feb. 23, 2012.
Fannie projected that the one-year ARM will average 2.6 percent in the first quarter then increase each subsequent quarter through the end of next year, when it is expected to reach 3.5 percent.
The index for the one-year ARM, the yield on the one-year Treasury note, closed at 0.16 percent Thursday, the same as a week earlier, Treasury data indicate.
Another ARM index, the six-month London Interbank Offered Rate — or LIBOR — slipped to 0.46 percent as of Wednesday from 0.47 percent last week, according to Bankrate.com.
ARM share in the latest Mortgage Market Index was 4.2 percent, off from 4.4 percent in the prior report.
Fannie’s forecast calls for ARM share to rise from 4 percent this quarter to 5 percent in the second quarter and continuing climbing through the third-quarter 2014, when it is projected to be 13 percent.