As stocks have risen over the past few trading sessions, a recent rally in Treasury notes faded — leaving little chance that any potential refinance wave will materialize. While rates moved little this past week, they are likely to be around a quarter percent higher in next week’s report.
Freddie Mac reported in its Primary Mortgage Market Survey for the week ended Thursday that the average 30-year fixed-rate mortgage was up 1 basis point from last week to 4.51 percent. But the 30-year was better than 4.58 percent during the same week in 2010.
The average 30-year mortgage was 4.92 percent for the month of May, a 7-basis-point improvement from April, according to Freddie’s regulator — the Federal Housing Finance Agency.
If the yield on the 10-year Treasury note is any indication, then mortgage rates will be around 25 BPS worse in next week’s reports. The 10-year yielded around 3.18 percent during trading today, rising from 2.93 percent at the close of trading last Thursday, according to market statistics from the Department of the Treasury and the Wall Street Journal.
The likelihood of an increase was supported by a majority of the 100 panelists surveyed by Bankrate.com for the week ended Wednesday. But 19 percent predicted that rates will fall at least 3 BPS over the next week, while the same share saw no changes ahead.
The spread between the conforming 30-year mortgage and jumbo 30-year loans was slashed last Friday to 43 BPS from 50 BPS the prior week, according to the U.S. Mortgage Market Index from Mortech Inc. and MortgageDaily.com.
No week-over-week change was recorded by Freddie for the average 15-year fixed-rate mortgage, which at 3.69 percent was 82 basis points lower than the 30-year versus the 81-basis-point spread last week. The spread between fixed-rate 30-year loans and 15-year mortgages widened to 82 BPS from 81 BPS last Thursday — making the 15-year option more attractive for borrowers.
The five-year, Treasury-indexed, hybrid, adjustable-rate mortgage averaged 3.22 percent in Freddie’s survey, 3 BPS better than last week.
At 2.97 percent, the one-year Treasury-indexed ARM was 2 BPS better than last week and 83 BPS below its standing a year earlier. Adjustments on one-year ARMs are determined by movement in the one-year Treasury yield, which rose to 0.19 percent Wednesday from 0.16 percent seven days earlier based on the Treasury Department data.
The six-month London Interbank Offered Rate, which is used as an ARM index on many subprime mortgages, was unchanged from 0.40 percent last week, Bankrate.com reported.
Improving ARM rates could help boost ARM share next week. Last Friday, ARM share of new loan inquiries eased to 10.05 percent from 10.22 percent a week prior, according to the Mortgage Market Index.