Long-term mortgage rates have fallen each of the past three weeks, while there has been no increase for four consecutive weeks.
Secondary mortgage lender Freddie Mac reported Thursday that 30-year fixed-rate mortgages averaged 4.22 percent in its Primary Mortgage Market Survey for the week ended Oct. 3.
The 30 year was down from 4.32 percent the prior week. Long-term mortgage rates have been lower each week since the week ended Sept. 12, when the average 30 year was 4.57 percent, and haven’t seen an increase since the week ended Sept. 5, when they also averaged 4.57 percent.
“With the onset of the federal government shutdown and declining consumer confidence, fixed mortgage rates fell for the third consecutive week,” Frank Nothaft, Freddie’s chief economist, said in the report. “Consumer sentiment fell for the second month in a row in September to its lowest reading since April, according to the University of Michigan. Moreover, a recent Bloomberg survey of professional forecasters suggests that a partial federal shutdown lasting one week would shave 0.1 percentage points off of GDP growth in the fourth quarter and even more if the shutdown lasts longer.”
The 30-year mortgage remains elevated compared to the 3.36 percent average as of Oct. 4, 2012.
Thirty-year rates are poised to remain near their current levels in Freddie’s next report based on Mortgage Daily’s analysis of Treasury market activity.
Data reported by the Department of the Treasury indicate that the 10-year Treasury yield — which fixed mortgage rates tend to track — averaged 2.64 percent during the three days that Freddie surveyed primary lenders for this week’s report, while the 10-year yield closed Thursday at 2.62 percent.
Forty-two percent of panelists surveyed by Bankrate.com for the week Oct. 3 to Oct. 9 expected mortgage rates to remain within 2 basis points of their current levels, while another 42 percent projected a decline. Just 16 percent forecasted a rate increase.
Pricing deteriorated for jumbo borrowers in the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended Sept. 27. The spread between conforming and jumbo mortgages widened to 31 BPS from 25 BPS seven days earlier.
Freddie’s survey indicated that 15-year fixed rates averaged 3.29 percent, falling from 3.37 percent in the week ended Sept. 26.
Shorter term loans lost some of their luster this week, coming in 93 basis points lower than 30-year loans versus the 95-basis-point spread in place last week, according to Freddie’s data.
A 4-basis-point decline from seven days earlier left five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 3.03 percent in Freddie’s survey.
At 2.63 percent, one-year Treasury-indexed ARMs averaged the same as last week but were up 6 BPS from a year earlier, Freddie reported.
One-year ARMs are adjusted based on the one-year Treasury yield, which moved up to 0.11 percent Thursday from 0.09 percent one week prior, according to the Treasury Department.
Bankrate.com reported that another ARM index, the six-month London Interbank Offered Rate, slipped to 0.37 percent as of Wednesday from 0.38 percent the same day last week.
Slightly fewer prospective borrowers opted for an ARM in the latest Mortgage Market Index report, with ARM share narrowing to 10.6 percent from the previous week’s 11.0 percent.