Interest rates on home loans fell again, and all signs point to similar rates in the next report.
There wasn’t much movement with 30-year fixed rates this week, with the average falling 3 basis point from last week to 4.10 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Oct. 31.
While it was the second consecutive weekly improvement, the average rate for 30-year mortgages was 71 BPS worse than this week last year, the secondary lender said.
The last time 30-year rates were this low was in the week ended June 20, when Freddie reported the average at 3.93 percent.
“Fixed mortgage rates eased further leading up to the Federal Reserve’s October 30th monetary policy announcement,” Freddie Mac Chief Economist Frank Nothaft explained in the report. “The Fed saw improvement in economic activity and labor market conditions since it began its asset purchase program, but noted the recovery in the housing market slowed somewhat in recent months and unemployment remains elevated.
“As a result, there was no policy change which should help sustain low mortgage rates in the near future.”
Freddie’s regulator, the Federal Housing Finance Agency, reported that conventional 30-year fixed rates averaged 4.63 percent in September, 14 BPS more than in August.
Thirty-year rates won’t move a whole lot over the next week based on Treasury market activity. Treasury Department data indicate that the 10-year Treasury note yield, which is closely tracked by mortgage rates, averaged 2.54 percent during the period when Freddie surveyed primary lenders for this week’s report, while it closed at 2.57 percent Thursday.
Mortgage Daily’s seven-day outlook was shared by 70 percent of the panelists surveyed by Bankrate.com for the week Oct. 31, to Nov. 6. A fifth of the panelists predicted that rates will decline at least 3 BPS, and just 10 percent forecasted a rise.
The Mortgage Bankers Association predicted in its latest MBA Mortgage Finance Forecast that 30-year mortgage rates will climb from 4.5 percent this quarter to 4.6 percent in the first-quarter 2014 and keep rising — reaching 5.1 percent by the end of next year.
Jumbo borrowers were quoted rates that were 29 BPS higher than for conforming borrowers, according to the U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended Oct. 25. The jumbo-conforming spread improved from 32 BPS in the previous report.
Freddie reported that the average 15-year fixed rate was 3.20 percent, 4 BPS better than in the week ended Oct. 24. Fifteen-year loans were priced 90 BPS lower than 30-year loans, better than last week’s spread of 89 BPS.
A 4-basis-point decline from a week earlier left five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 2.96 percent in Freddie’s survey.
One-year Treasury-indexed ARMs averaged 2.64 percent, according to Freddie, rising 4 BPS from the previous report and 6 BPS from the report for the week ended Nov. 1, 2012.
The underlying index for one-year ARMs, the yield on the one-year Treasury note, fell to 0.10 percent Thursday from 0.12 percent a week earlier, according to the Treasury Department data.
No change was reported by Bankrate.com for the six-month London Interbank Offered Rate, which averaged 0.36 percent Wednesday.
ARM share increased to 10.7 percent in the latest Mortgage Market Index report from 10.5 percent the prior week.