The 30-year mortgage was reported this week at its lowest level ever recorded. But Treasury market activity suggests that long-term mortgages could cost more in the next report.
It was down only a single basis point from last week, but that was enough to land the average 30-year fixed-rate mortgage at 3.88 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thurday — the lowest rate on record. The 30 year was 86 BPS better than this week last year.
The 30-year mortgage is looking like it might be higher in next week’s report, based on an analysis of data released by the Department of the Treasury. During the two days that Freddie surveyed its 125 mortgage lenders, the 10-year yield averaged 1.90 percent. The 10-year yield closed at 2.01 percent today — putting rates 10 BPS higher in the next report.
But a majority of Bankrate.com panelists for the week Jan. 19 to Jan. 25 see no changes ahead for mortgage rates, while nearly a third have rates rising at least 3 BPS and 15 percent predicted a downturn.
Freddie predicted that the 30 year will be 4.0 percent this quarter, then increase to 4.3 percent in the second quarter. Freddie estimates that the 30 year will increase 20 BPS each quarter from then on through the end of next year.
Secondary rival Fannie Mae forecasts the 30 year at 3.9 this quarter then 4.0 percent in the second and third quarters.
But the 30-year mortgage will average 4.1 percent in the first quarter, according to the Mortgage Bankers Association, which has the 30 year at 4.3 percent in both the second and third quarters.
Prospective borrowers inquiring about a jumbo mortgage were quoted a premium of 67 BPS in the U.S. Mortgage Market Index report for the week ended Jan. 13 from Mortech Inc. and MortgageDaily.com. The jumbo-conforming spread was 75 BPS in the prior report.
The 15-year fixed-rate mortgage moved up a basis point from the prior week to 3.17 percent in Freddie’s survey. Fifteen-year borrowers were treated to a 71-basis-point discount over 30-year borrowers this week, though that wasn’t as good as the 73-basis-point discount last week.
Freddie reported the average five-year, Treasury-indexed, hybrid, adjustable-rate mortgage at 2.82 percent, the same as the prior report.
The one-year Treasury-indexed ARM slipped to 2.74 percent from 2.76 percent in Freddie’s prior survey and was 3.25 percent in the same week during 2011.
Freddie predicted the one-year ARM will averge 2.9 percent in the first half of this year and 3.0 percent in the second half. Fannie has the one year at 2.8 percent this quarter, 2.9 percent in the second quarter and 3.0 percent in the second half.
The index for the one-year ARM is the yield on the one-year Treasury note, which the Treasury Department reported at 0.11 percent as of today, the same as last Friday.
The London Interbank Offered Rate, or LIBOR, fell to 0.79 percent as of Wednesday from 0.81 percent a week earlier, Bankrate.com reported.
The National Monthly Median Cost of Funds Ratio was reported by the Office of the Comptroller of the Currency at 1.20 percent for November.
ARM share of loan inquiries was 4.50 percent in the most recent Mortgage Market Index report, lower than 5.12 percent a week earlier.
Freddie has the ARM share of closed production at 14 percent all of this year and next year. Fannie forecasted ARM share of applications at 6 percent during the first three quarters of 2012. MBA, meanwhile, predicts ARM share will climb from 5 percent during the first half to 6 percent in the second half.