Mortgage rates declined to the lowest levels on record this week, while jumbo and 15-year mortgages improved versus the conforming 30-year mortgage. It’s possible rates could ease some more.
For the first time since Freddie Mac began tracking mortgage rates in 1971, the 30-year fixed-rate mortgage fell below 3.90 percent.
From Monday through Wednesday, when Freddie surveys its lenders for the report, the yield on the 10-year Treasury note was 1.97 percent, based on data from the Department of the Treasury. But today, the 10-year yield fell to 1.94 percent, leaving the possibility open that rates might fall 3 or so basis points by the next survey.
But Bankrate.com panelists for the week Jan. 12 to Jan. 18 see it differently. An equal share — 47 percent — each see rates either rising at least 3 BPS or not changing. Just 6 percent predicted a decline.
A forecast from the American Bankers Association has the 30-year averaging 4.03 percent this quarter then rising each quarter to reach 4.26 percent in the fourth-quarter 2012.
The 30-year jumbo mortgage was priced 75 BPS higher than the 30-year conventional mortgage in the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended Jan. 6, better than the 80-basis-point spread in last week’s report.
A record low was also recorded by Freddie for the 15-year fixed-rate mortgage, which fell to 3.16 percent from 3.23 percent last week. The spread between 15- and 30-year loans was 73 BPS this week, wider than 68 BPS in the previous week.
In fact, all rates that Freddie tracks fell to the lowest levels on record. The five-year, Treasury-indexed, hybrid, adjustable-rate mortgage dropped to 2.82 percent from 2.86 percent, and the one-year Treasury-indexed ARM declined to 2.76 percent from 2.80 percent and was 3.23 percent in the same week last year.
The Treasury Department data indicated that today’s yield on the one-year Treasury note, which is used to determine one-year ARM adjustments, was the same as last Friday’s: 0.11 percent.
Another ARM index, the six-month London Interbank Offered Rate, was unchanged from last week at 0.81 percent according to Bankrate.com.
ARMs represented 5.12 percent of inquiries in the Mortgage Market Index report, slightly more than 5.06 percent in the prior report.