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Rates Move Within Narrow Range

Rates

Jumbo mortgage pricing improved, the one-year adjustable-rate mortgage was higher and 15-year loans were less attractive this week. The 30-year mortgage, however, was unchanged and is likely to stay put through next week’s reports.

Freddie Mac reported in its Primary Mortgage Market Survey for the week ended Thursday that the average 30-year fixed-rate mortgage was 4.50 percent. There was no change from last week, but the 30 year has improved from 4.69 percent during the same week in 2010.

At this point, the 30 year is likely to be about the same in the next report based on the yield on the 10-year Treasury Note — which was 2.91 percent during trading today versus 2.93 percent at the close of business last Thursday based on data reported by the Department of the Treasury and the Wall Street Journal.

A majority of panelists surveyed by Bankrate.com for the week June 23 to June 29 agreed that rates won’t change much over the next seven days. A third predicted an increase of at least 3 BPS and 7 percent forecasted a decline.

In Fannie Mae’s latest housing outlook, the 30-year mortgage is expected to average 4.7 percent during the second and third quarters then rise about 10 BPS each quarter after that through the end of next year.

The Mortgage Bankers Association was a little more aggressive in its most-recent finance forecast. The trade group also has the 30 year at 4.7 percent this quarter, but it is expected to be 5.2 percent by the end of this year and 5.7 percent by the fourth-quarter 2012.

The jumbo spread — the difference between 30-year rates on conforming and jumbo mortgages — fell to 50 BPS in the U.S. Mortgage Market Index report for the week ended June 17. The spread in the prior report was 52 BPS.

A 2-basis-point weekly rise was reported by Freddie for the 15-year fixed-rate mortgage, which averaged 3.69 percent in the latest report. The spread between the 15 year and 30 year fell to 81 BPS from 83 BPS last week — diminishing the benefit of the shorter-term loan.

The five-year, Treasury-indexed, hybrid ARM was down 2 BPS — to 3.25 percent — according to Freddie’s survey.

The only product in Freddie’s report to see an increase was the one-year Treasury-indexed ARM, which was up 2 BPS to 2.99 percent. The one-year was much better, however, than 3.77 percent a year earlier.

Fannie has the one-year ARM averaging 3.1 percent in the second quarter and increasing 10 BPS each quarter until the final period of 2012. MBA also predicts the one-year will be 3.1 percent this quarter, but the association sees the one-year climbing to 3.8 percent by the fourth quarter of this year.

The one-year ARM moves in tandem with the yield on the one-year Treasury Note, which fell to 0.16 percent as of Wednesday from 0.19 percent seven days prior, according to Treasury Department statistics.

Unlike the one-year Treasury, another ARM index — the six-month London Interbank Offered Rate — was higher this week. LIBOR moved up to 0.40 percent from 0.39 percent last week.

ARM share of loan inquiries in the Mortgage Market Index fell to 10.22 percent from the previous week’s 10.52 percent.

The share of loan applications that will be for an ARM is pegged at 6 percent this quarter and each of the three following quarters, Fannie forecasted. MBA projected that ARM share will be 7 percent this entire year and 6 percent during all of next year.

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