Fixed mortgage rates settled at or near their all-time lows this week, and there is little indication that they will increase in the upcoming report.
The 30-year fixed-rate mortgage averaged 3.35 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday.
That was just 4 basis points more than the all-time low of 3.31 percent in the week ended Nov. 21, 2012.
“Mortgage rates eased somewhat following the release of the advance estimate of real GDP growth for the first quarter of the year, which rose 2.5 percent but fell short of the market consensus forecast,” Freddie Mac Chief Economist Frank Nothaft explained in the report.
It’s possible that the 30-year rate could be lower in next week’s report based on a Mortgage Daily analysis of Treasury market activity this week.
The yield on the benchmark 10-year Treasury note averaged 1.69 percent during the days that Freddie surveyed primary lenders for this week’s report. The 10-year yield closed at 1.66 percent on Thursday.
However, if tomorrow’s employment report is as weak as last month’s, mortgage rates could ease more. But a strong employment report could place upward pressure on rates.
Mortgage rates won’t move more than 2 BPS over the next week or so based on 58 percent of panelists surveyed by Bankrate.com for the week May 2 to May 8. A quarter forecasted a drop and 17 percent predicted that rates will rise.
The Federal Open Market Committee issued a statement this week indicating that it would maintain downward pressure on longer-term interest rates by continuing its purchases of $40 billion in agency mortgage-backed securities and $45 billion in longer-term Treasury securities each month.
“The committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability,” the FOMC statement said. “The committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.”
Jumbo mortgages were priced at a 32-basis-point premium over conforming loans in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended April 26. The spread between jumbo and conforming loans worsened from 29 BPS in the previous report.
Freddie reported the average 15-year fixed-rate mortgage at a record-low 2.56 percent, down 5 BPS from the previous report. Fifteen-year mortgages were priced 79 BPS better than 30-year loans this week, the same margin as last week.
At 2.56 percent, the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage was 2 BPS below last week’s rate, according to Freddie.
A 6-basis-point decline over the past seven days left the one-year Treasury-indexed ARM at 2.56 percent in Freddie’s survey. The one year averaged 2.70 percent in the same week during 2012.
The underlying index for the one-year ARM, the yield on the one-year Treasury note, slipped to 0.11 percent today from 0.12 percent last Thursday.
No week-over-week change in the six-month London Interbank Offered Rate left the index at 0.43 percent, according to Bankrate.com.
The Mortgage Market Index report indicated that ARM share edged down to 4.9 percent from the previous week’s 5.0 percent.