Average fixed rates on home loans fell this week to the lowest levels ever recorded. While the 30-year fixed-rate mortgage is expected to stay near its current level through the middle of next year, the short-term forecast is for an increase.
At 3.31 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Nov. 21, the 30-year fixed-rate mortgage averaged less than it ever has previously.
Mortgage rates could increase around 5 BPS by next week’s report based on an analysis of Treasury market activity. The Department of the Treasury reported that the yield on the 10-year Treasury note averaged 1.64 percent during the days that Freddie surveyed lenders this week, while the 10-year yield closed at 1.69 percent on Wednesday.
Sixty-four percent of Bankrate.com panelists for the week Nov 21 to Nov. 28 predicted mortgage rates won’t move more than 2 BPS during the next week. More than a quarter expected an upswing, and a decrease was projected by 9 percent.
Fannie Mae predicts that the 30-year mortgage will average 3.4 percent in the final three months of this year and the first six months of next year.
The Mortgage Bankers Association’s forecast has the 30 year at 3.7 percent in the fourth quarter then rising each quarter next year.
Jumbo mortgages were priced at a 55-basis-point premium over conforming loans in the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended Nov. 16, better than the 58-basis-point jumbo-conforming spread in the prior report.
A 2-basis-point decline from last week left the 15-year fixed-rate mortgage averaging 2.63 percent — the lowest level ever recorded by Freddie. The average 15-year loan had a rate that was 68 BPS better than the 30-year mortgage, not quite as good as the 69-basis-point spread during the previous week.
No change from the week ended Nov. 17 left the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaging 2.74 percent, according to Freddie.
A 1-basis-point week-over-week increase was registered for the one-year Treasury-indexed ARM, leaving it at 2.56 percent in Freddie’s latest survey. The one-year ARM averaged 2.79 percent in the week ended Nov. 23, 2011.
The one-year ARM is projected by Fannie to average 2.6 percent from the current quarter until the third-quarter 2013.
The yield on the one-year Treasury note, which is used as the index on one-year ARMs, closed at 0.17 percent Wednesday, the same as last Thursday, according to Treasury Department data.
A 1-basis-point rise from last week was reported by Bankrate.com for the six-month London Interbank Offered Rate, which was 0.53 percent as of Wednesday.
ARM share was mostly unchanged from the previous week in the latest Mortgage Market Index report at 2.3 percent.
Fannie has ARM share of loan applications at 5 percent this quarter and 6 percent during the following three quarters.
MBA predicts ARM share will be 6 percent this quarter and in the first-quarter 2013 then spend the rest of next year at 7 percent.