Fixed mortgage rates inched up this week but could be better in the next report. One adjustable-rate mortgage program diverged from other mortgage rates and moved lower.
There was little change this week in the 30-year fixed-rate mortgage, which averaged 3.57 in Freddie Mac’s Primary Mortgage Market Survey for the week ended March 28. The 30 year was 3.54 percent last week and 3.99 percent in the same week last year.
On purchase financing, the Federal Housing Finance Agency reports that average 30-year fixed rates were 3.62 percent in February, 9 basis points higher that in January.
Interest rates on home loans are likely to be around 4 BPS better in Freddie’s next survey based on a Mortgage Daily analysis of Treasury market data.
The yield on the 10-year Treasury note, which is a benchmark for mortgage rates, averaged 1.91 percent over the period that Freddie surveyed primary lenders for this week’s survey, according to Treasury Department data. But the 10-year yield closed at just 1.87 percent on Thursday.
Half of the panelists surveyed by Bankrate.com for the week March 28 to April 3 predicted that mortgage rates won’t move more than 2 BPS over the next week. However, 42 percent forecasted a decline and just 8 percent expected an increase.
Fannie Mae projected in its Housing Forecast: March 2013 that 30-year fixed-rate mortgages will average 3.7 percent in the second quarter and increase each quarter through the end of next year, when the 30 year is expected to reach 4.5 percent.
The Mortgage Bankers Association has 30-year rates averaging 3.9 percent in the second quarter, 4.2 percent in the third quarter and 4.3 percent in the fourth quarter.
Jumbo pricing continued to improve based on the U.S. Mortgage Market Index report from Optimal Blue and Mortgage Daily. In the week ended March 22, the premium for a jumbo mortgage was 15 BPS, down from the 18-basis-point jumbo-conforming spread in the prior report.
A 4-basis-point increase from the week ended March 21 left the 15-year fixed-rate mortgage averaging 2.76 percent in Freddie’s latest report. The spread between 15- and 30-year mortgages narrowed to 81 BPS from the previous week’s 82-basis-point spread.
Freddie reported the average five-year, Treasury-indexed, hybrid ARM at 2.68 percent as of Thursday, 7 BPS worse than the previous report.
But one product — the one-year Treasury-indexed ARM — saw a week-over-week decline. The one-year average fell to 2.62 percent from 2.63 percent a week earlier and 2.78 percent in the week ended March 29, 2012.
Fannie expects one-year ARMs to average 2.7 percent in the second quarter, 2.9 percent in the third quarter and 3.0 percent in the fourth quarter.
There was no movement from seven days prior in the yield on the one-year Treasury note, which closed Thursday at 0.14 percent, according to the data from the Department of the Treasury.
Also idle was the six-month London Interbank Offered Rate, which was 0.45 percent this week and last week, according to Bankrate.com.
ARM share slipped to 4.4 percent in the latest Mortgage Market Index report from the prior report’s 5.1 percent.
ARM share will move from 5 percent in the second quarter to 7 percent the following period and 9 percent in the final three months of 2013, according to Fannie.
MBA’s ARM share prediction is much simpler than Fannie’s: 7 percent for all of 2013 and the entire first half of 2014.
