Mortgage rates moved within a narrow range this week and are likely to continue along the same path into the next set of reports.
Inching up a single basis point from last week, the average 30-year fixed-rate mortgage came in at 4.52 percent in Freddie Mac’s latest survey of 125 mortgage banking firms. But the 30 year was lower than 4.56 percent during the same week last year.
The yield on the 10-year Treasury note, a benchmark for mortgage rates, teetered around 3.02 percent during trading today, a little higher than 2.98 percent at the market’s close last Thursday, according to data from the Department of the Treasury and WSJ.com. The movement suggests little change for mortgage rates in next week’s report.
No clear direction for mortgage rates can be determined from Bankrate.com’s survey for the week July 21 to July 27. Rates will rise at least 3 BPS over the next week according to 46 percent of the panelists, while the same share saw no changes ahead. Just 8 percent predicted a decline.
On a longer-term basis, Freddie predicts that the 30-year mortgage will average 4.7 percent in the third quarter, 5.0 percent in the fourth quarter and continue rising through 2012 to end the year at 6.0 percent. The Mortgage Bankers Association forecasted the 30-year to be 4.8 percent this quarter, 5.0 percent in the following quarter and keep climbing through the fourth-quarter 2012 when it reaches 5.6 percent.
The spread between the conventional 30-year mortgage and the jumbo 30-year mortgage widened to 47 BPS from the previous week’s 43 BPS in the U.S. Mortgage Market Index report for the week ended July 15 from Mortech Inc. and MortgageDaily.com.
Like the conforming 30 year, the average 15-year fixed-rate mortgage rose one basis point from last week in Freddie’s report to 3.66 percent. The parallel movement with the 30 year left the spread between products of the two terms unchanged from last week at 86 BPS.
But Freddie said that the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage was lower this week, falling to 3.27 percent from 3.29 percent.
With a 2-basis-point increase, the one-year Treasury-indexed ARM was 2.97 percent this week in Freddie’s survey. The one-year averaged 3.70 percent at the same point last year. Freddie sees the one-year ARM at 3.1 percent in the current quarter and rising 10 BPS every three months until the third quarter of next year.
The Treasury Department reported that the yield on the one-year Treasury bill closed Wednesday at 0.19 percent, 3 BPS higher than a week earlier.
The six-month London Interbank Offered Rate, an index widely used on outstanding subprime ARMs, continued trending higher — reflecting nervousness about European banks. Bankrate.com reported LIBOR at 0.42 percent this week, up from 0.41 percent last week.
ARM share of new loan inquires rose to 9.91 percent in the Mortgage Market Index report from 9.79 percent the prior week.
Freddie projects that ARM share of originations will be 11 percent in the third quarter, 10 percent in the fourth quarter and 12 percent in the first nine months of 2012. MBA has ARM share at 7 percent during all of 2011 and 2012.
