Mortgage Daily Logo

Rates Sink On Euro Concerns


A banking crisis in a small European island nation helped lop off nearly 10 basis points from long-term U.S. fixed mortgage rates this week.

The 30-year fixed-rate mortgage averaged 3.54 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended March 21. Thirty-year rates were 9 BPS lower than last week and 54 BPS better than the same week in 2012.

Freddie Mac Chief Economist Frank Nothaft suggested that “low and stable inflation” was the main culprit behind the decline in mortgage rates.

But a more likely cause for this week’s improvement was market anxiety over a bailout in Cyprus. The country’s parliament has thus far rejected a bailout plan from the European Union that would tax bank deposits. As investor concern grows over Europe’s woes, many investors turn to the safe have of U.S. Treasuries — driving yields down in the process.

Mortgage rates won’t likely move much from their current levels by the time Freddie issues its next report, according to a Mortgage Daily analysis of Treasury market activity. During the days that Freddie surveyed lenders for this week’s report, the yield on the 10-year Treasury note averaged 1.95 percent — the same as it closed at Thursday based on Treasury Department data.

Panelists surveyed by for the week March 21 to March 27 offered little insight into which direction rates might move over the next week or so, with 44 percent predicting rates will fall at least 3 BPS and another 44 percent forecasting no change. Just 12 percent forecasted an increase.

The Federal Reserve said Wednesday that its Federal Open Market Committee plans to keep rates low at least as long as the unemployment rate remains higher than 6.5 percent.

The Fed projects that unemployment will stay above 6.5 percent through at least this year and possible into 2015.

Freddie predicts that 30-year fixed rates will average 3.5 percent this quarter and rise 10 BPS each quarter until the first-quarter 2014.

Jumbo mortgages were priced at an 18-basis-ponit premium over conforming loans in the U.S. Mortgage Market Index report from Optimal Blue and Mortgage Daily for the week ended March 15, wider than the 17-basis-pont spread in the previous report.

A 7-basis-point drop from the week ended March 14 left 15-year fixed rates averaging 2.72 percent in Freddie’s survey. Shorter-term loans were less attractive this week, with the discount for a 15-year mortgage falling to 82 BPS from a spread of 84 BPS last week.

Freddie reported average five-year, Treasury-indexed, hybrid, adjustable-rate mortgages at 2.61 percent, the same as seven days earlier.

The one-year Treasury-indexed ARM averaged 2.63 percent, a basis point below the previous report and 21 BPS better than the week ended March 22, 2012.

Freddie projects that the one year will average 2.6 percent each of the first three quarters of this year.

The yield on the one-year Treasury note, which serves as the index for one-year ARMs, slipped to 0.14 percent today from 0.15 percent last Thursday, according to Treasury Department data.

The six-month London Interbank Offered Rate, which is also used to determine rate and payment adjustments on ARMs, was 0.45 percent as of Wednesday, reported. LIBOR was unchanged from a week earlier.

ARM share in the latest Mortgage Market Index report widened to 5.1 percent from 4.5 percent the prior week.

ARM share is forecasted by Freddie to be 10 percent in the first quarter then widen by 1 percentage point each quarter through the middle of 2014.

Related Posts

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Up 92 BPS From Year Ago Weekly interest rates might continue holding Oct. 25, 2018 By SAM GARCIA Mortgage Daily Over the past year, weekly fixed interest rates on single-family loans have soared 92 basis points. But little change was reported from last...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Up 92 BPS From Year Ago

Over the past year, weekly fixed interest rates on single-family loans have soared 92 basis points. But little change was reported from last week, and more of the same is expected. On conventional loans utilized to finance a home purchase with amounts up to the...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rate Forecasts Have Little Change Ahead

Thirty-year mortgage rates moved lower this past week and this past month. Short- and long-term forecasts have little movement ahead for mortgage rates. Ellie Mae Inc.'s Origination Insight Report | September 2018 indicated that average 30-year note rates on...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Soar, Could Sink in Next Report

An expected surge in mortgage rates came to fruition this week. The latest forecast has fixed rates tumbling in next week's report. A new index for adjustable-rate mortgages moved lower. A stunning 19-basis-point surge from the preceding week left average 30-year...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Dip, But Likely to Skyrocket

Mortgage rates retreated a modest amount just one week after climbing to a seven-year high. The next rate report, however, is likely to reflect significant escalation. Prospective 30-year borrowers using the LendingTree network during September were offered an average...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI