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Record 10-Year Treasury Points to Another 30-Year Mortgage Record


The 30-year mortgage has been in record territory for five consecutive weeks, while 15-year loans fell below 3 percent for the first time. A new record today for the 10-year Treasury yield likely means that a new low is ahead next week for mortgage rates.

A 3-basis-point drop from last week left the 30-year fixed-rate mortgage at 3.75 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended May 31.

The 30-year has never been lower since Freddie began tracking the benchmark mortgage in the seventies. It was the fifth week in a row that the 30-year fell to a new all-time low.

During the same week last year, the 30 year averaged 4.55 percent.

“Market concerns over tensions in the Eurozone led to a decline in long-term Treasury bond yields helping to bring fixed mortgage rates to new record lows this week,” said Freddie’s chief economist, Frank Nothaft, in the report.

Mortgage rates weren’t the only yields reaching all-time lows.

The yield on the 10-year Treasury note closed at 1.59 percent on Thursday, according to Department of the Treasury data. It was the lowest level on record for the 10 year based on historical data from the Federal Reserve Board dating back to 1962. The 10-year averaged 1.71 percent during the period that Freddie surveyed lenders for this week’s report, indicating that mortgage rates could be roughly 12 BPS better in the next survey.

However, political developments in Greece or advancements in Spain’s efforts to stabilize its banking system could encourage global markets and push U.S. rates higher.

Only 31 percent of’s panelists surveyed for the week May 31 to June 6 predicted that rates will fall over the next seven days or so. Half forecasted no changes ahead, while 19 percent predicted at least a 3-basis-point rise.

Freddie’s regulator and conservator, the Federal Housing Finance Agency, reported that the 30-year mortgage averaged 4.21 percent for purchase-money loans during the final week of April, 9 BPS higher than a month earlier.

Jumbo loans were priced at an average of 58 BPS more than conforming mortgages in the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended May 25. The jumbo-conforming spread tumbled from 63 BPS in the prior report.

The 15-year mortgage averaged less than 3 percent for the first time ever in Freddie’s survey, falling to 2.97 percent from 3.04 percent a week earlier. Borrowers who opted for the shorter-term loan had a rate that was discounted 78 BPS over the 30-year rate, improving from a spread of 74 BPS in the previous report.

A 1-basis-point week-over-week increase, however, was reported by Freddie for the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage, which averaged 2.84 percent.

There was no change from last week for the one-year Treasury-indexed ARM, which averaged 2.75 percent in Freddie’s report. The one year was 3.13 percent during the same week last year.

The index for the one-year ARM, the yield on the one-year Treasury note, closed at 0.18 percent today, down 3 BPS from last Thursday, Treasury data indicated.

A subprime ARM index, the yield on the six-month London Interbank Offered Rate, was reported by at 0.74 percent as of Wednesday, the same as the previous Wednesday.

ARM share was 4.2 percent in the latest Mortgage Market Index report, shrinking from 4.4 percent the prior week.

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