For the second week in a row, fixed rates on mortgages fell to the lowest levels on record. Treasury market activity and market predictions suggest that no increase is ahead during the next week.
The 3.83 percent 30-year fixed-rate mortgage reported by Freddie Mac in its Primary Mortgage Market Survey for the week ended May 10 was a new all-time record low. The 30-year mortgage was 3.84 percent a week earlier and 4.63 percent a year earlier.
“Following April’s weaker than expected employment report, and the French and Greek election results raising concerns over the stability of the Euro currency zone, long-term Treasury bond yields declined allowing fixed mortgage rates to ease to new all-time record lows this week,” Freddie’s chief economist, Frank Nothaft, stated in the report. “The economy added just 115,000 jobs, below the market consensus forecast and less than in March. And although the unemployment rate declined, it reflected fewer people actively seeking jobs.”
Mortgage rates can be expected to remain near their current levels based on this week’s Treasury market activity. The yield on the 10-year Treasury note, which is tracked by mortgage rates, was 1.89 percent during the period that Freddie surveyed participants in the weekly report, the same as it closed at today, according to data provided by the Department of the Treasury.
Half of the panelists surveyed by Bankrate.com for the week May 10 to May 16 forecasted that mortgage rates will decline at least 3 basis points during the next week or so. Another 43 percent saw no changes ahead, and just 7 percent predicted an increase.
Borrowers out shopping for a jumbo mortgage were quoted rates that were at a 53-basis-point premium over conforming mortgages, according to the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the week ended May 4. The jumbo-conforming spread was unchanged from the previous report.
Also falling to a new record low was the average 15-year fixed-rate mortgage, which Freddie reported at 3.05 percent versus 3.07 percent in the previous report. The discount for a 15-year mortgage over a 30-year loan improved to 78 BPS from the previous week’s 77 BPS.
Freddie reported the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage at 2.81 percent this week, improving from last week’s 2.85 percent.
Bucking the rate trend was the one-year Treasury-indexed ARM, which Freddie reported at 2.73 percent, up from 2.70 percent in the previous survey. But the one-year ARM was better than 3.11 percent this week last year.
Treasury Department data indicate that the yield on the underlying one-year Treasury note slipped to 0.18 percent today from 0.19 percent last Thursday.
A less-used ARM index, the six-month London Interbank Offered Rate — or LIBOR — was 0.73 percent as of Wednesday, unchanged for the second consecutive week, according to Bankrate.com
ARM share edged up to 4.829 percent in the latest Mortgage Market Index report from the previous week’s 4.824 percent share.