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Improving Rates Headed Lower

Rates

Mortgage rates fell for the third consecutive week and appear to be headed even lower.

A 7-basis-point week-over-week improvement was reported for the average 30-year fixed-rate mortgage, which was 4.71 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday. The 30-year was 29 BPS better than a year earlier.

It was a good-news-bad-news scenario, according to Freddie’s chief economist, Frank Nothaft, who noted that weak economic data pulled rates lower.

It looks like rates might fall further based on 10-year Treasury yield action. The 10-year yield closed at 3.18 percent today, sinking from 3.34 percent last Thursday, according to Department of the Treasury data. The 16-basis-point drop suggests that the 30-year year could fall another 10 BPS in Freddie’s next survey.

But no clear direction was offered by Bankrate.com panelists for the week May 5 to May 11 — with 39 percent predicting that rates will stay within 2 BPS of current levels during the next week, a third projecting an increase and more than a quarter forecasting a decline.

Jumbo loans became more expensive relative to their conforming counterparts, with the jumbo-conforming spread increasing to 60 BPS in the U.S. Mortgage Market Index report from Mortech Inc. and MortgageDaily.com for the week ended April 29. The spread was 57 BPS in the prior report.

Freddie said that the average 15-year fixed-rate mortgage fell to 3.89 percent from 3.97 percent a week earlier. The spread between the 15-year and the 30-year mortgage increased to 82 BPS from the previous report’s 81 BPS.

The five-year, Treasury-indexed, hybrid, adjustable-rate mortgage fell to 3.47 percent in Freddie’s survey from 3.51 percent in the previous report.

The one-year, Treasury-indexed ARM averaged 3.14 percent, down just a basis point over the past seven days. The one-year averaged 4.07 percent a year earlier.

The one-year Treasury yield, which is used as the index for the one-year ARM, declined to 0.20 percent today from 0.23 percent seven days prior, the Treasury Department reported.

It was another week of no change for the six-month London Interbank Offered Rate, which was 0.43 percent, Bankrate.com data indicate.

ARM share was 10.79 percent in the latest Mortgage Market Index report, rising from the previous week’s 10.42 percent.

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