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Signs Point to Improved Interest Rates

Rates

Mortgage rates were mixed this past week but are falling this week.

A one-basis-point increase from last week lifted the average 30-year fixed-rate mortgage to 4.88 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday. The 30-year was still lower, however, than 4.95 percent in the same week during 2010.

While the 30-year drifted higher this past week, the yield on the 10-year Treasury fell to 3.46 percent at Thursday’s close from 3.58 percent a week earlier, according to Department of the Treasury data. A deteriorating stock market had investors rushing to the relative safety of Treasury bonds — pushing prices higher and yields lower. The 10-year movement suggests mortgages rates could be more than 10 BPS better in next week’s reports.

But a majority of panelists surveyed by Bankrate.com for the week March 10 to March 16 disagreed, predicting that mortgage rates will rise at least 3 BPS over the next week. No change was forecasted by 47 percent, and there weren’t any panelists who forecasted a decline.

The spread between the jumbo 30-year mortgage and the conforming 30-year was unchanged from last week at 70 BPS in the U.S. Mortgage Market Index for the week ended March 4.

Freddie reported that the average 15-year fixed-rate mortgage was unchanged over the past seven days at 4.15 percent. The spread between the 15-year and the 30-year widened to 73 BPS from the prior week’s 72 BPS.

The five-year Treasury-indexed adjustable-rate mortgage was 3.73 percent in Freddie’s survey, up a basis point over the past week.

A 2-basis-point weekly decline was recorded by Freddie for the one-year Treasury-indexed ARM, which came in at 3.21 percent. The one-year was 4.22 percent at the same time last year.

The yield on the one-year Treasury, which is used as the index for one-year ARMs, closed today at 0.25 percent, lower than 0.29 percent last Thursday, based on Treasury Department data. But there was no change in the six-month LIBOR, which averaged 0.46 as of Wednesday, according to Bankrate.com.

The share of mortgage shoppers who inquired about an ARM fell to 9.26 percent in the latest Mortgage Market Index report from 9.45 percent the prior week.

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