The Middle East conflict helped pull down fixed mortgage rates this week. But the same could not be said for hybrid adjustable rates.
At 4.51 percent, 30-year fixed-rate mortgages averaged 7 basis points less than a week earlier, Freddie Mac reported in its Primary Mortgage Market Survey for the week ended Aug. 29.
The secondary lender’s chief economist, Frank Nothaft, credited speculation that the Federal Reserve will delay tapering its purchases of agency mortgage-backed securities and U.S. Treasury bonds for the decline in rates.
However, the drop was more likely the result of nervous financial markets reacting to the potential conflict in Syria — driving down stock prices, pushing up oil prices and pulling down Treasury yields.
But even with the improvement in mortgage rates, the 30 year was higher than 3.59 percent one year earlier.
Freddie’s regulator and conservator, the Federal Housing Finance Agency, reported that the national average contract mortgage rate for the purchase of previously occupied homes was 4.01 percent in July, up from 3.55 percent in June.
The 30 year isn’t likely to be much different in next week’s report based on Mortgage Daily’s analysis of Treasury market activity this week.
Data from the Department of the Treasury indicate that the yield on the 10-year Treasury note averaged 2.76 percent during the three days Freddie surveyed primary lenders for this week’s report, while it closed at 2.75 percent Thursday.
Forty-six percent of panelists surveyed by Bankrate.com for the week Aug. 29 to Sept. 4 agreed that rates won’t move over the next week. A decline of at least 3 BPS was forecasted by 36 percent of the panelists, while 18 percent predicted an increase.
The Mortgage Bankers Association projects that 30-year fixed rates will average 4.5 percent this quarter, 4.7 percent in the fourth quarter and 4.8 percent in the first-half 2014.
Jumbo 30-year loans were priced 25 BPS higher than conforming loans in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended Aug. 23, more competitive than 37 BPS a week earlier.
Freddie said that the average 15-year fixed-rate mortgage moved down 6 BPS from the week ended Aug. 22 to 3.54 percent. Fifteen-year loans were priced at a 97-basis-point discount to 30-year loans, not quite as good as the 98-basis-point spread in the previous report.
The five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaged 3.24 percent, rising from 3.21 percent in Freddie’s previous survey.
One-year ARMs moved lower in Freddie’s report, to 2.64 percent from the prior week’s 2.67 percent. The one year was just 1 basis point higher than in the week ended Aug. 30, 2012.
There was no change in the index for one-year ARMs, the yield on the one-year Treasury note, which the Treasury Department reported closed at 0.14 percent today.
Another ARM index, the six-month London Interbank Offered Rate, was also unchanged from a week earlier, coming in at 0.39 percent Wednesday, according to Bankrate.com.
ARM share in the latest Mortgage Market Index report rose to 10.7 percent from the prior week’s 9.7 percent share.