Mortgage Daily Logo

1-Year ARM Takes Spotlight


As fixed rates rose this week, the one-year adjustable-rate mortgage tumbled 13 basis points to its lowest level in nearly three decades — pushing ARM share higher. The outlook for the one-year is a continued decline.

Bouncing off its record-low reached last week, the average 30-year fixed-rate mortgage moved 2 basis points higher to 4.21 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday. The 30-year was 5.00 percent a year ago.

The yield on the 10-year Treasury closed at 2.57 percent today, up 5 BPS from last Thursday, according to data from the U.S. Department of the Treasury. Fixed-mortgage rates tend to track the 10-year yield. Given that the 30-year mortgage moved up only 2 BPS during the same period — mortgage rates might be higher in next week’s reports.

In its October economic outlook, Fannie Mae predicted that the 30-year will average 4.3 percent this quarter and through the third quarter of next year.

Half of the panelists surveyed by for the week Oct. 21 to Oct. 27 predicted that mortgage rates will not move more than 2 BPS during the next week or so. A third projected an increase and 17 percent expected a decline.

The jumbo spread — the difference between the jumbo 30-year fixed-rate mortgage and the conforming 30-year — fell to 90 BPS in the Mortech-Mortgage Daily Mortgage Market Index report for the week ended Wednesday. The spread was 95 BPS last week.

Like the 30-year, the 15-year fixed-rate mortgage came in at 2 BPS higher in Freddie’s report to land at 3.64 percent.

Unlike fixed rates, the hybrid Treasury-indexed ARM moved 2 BPS lower in Freddie’s survey to 3.45 percent.

Down a whopping 13 BPS, Freddie said the one-year Treasury-indexed ARM averaged 3.30 percent — its lowest level since 1984. The one-year was 4.54 percent at this same time last year. Fannie projects that the one-year will average 3.4 percent in the fourth quarter then spend the next two quarters at 3.3 percent.

The ARM index on the one-year, the yield on the one-year Treasury, closed today at 0.22 percent, the same as last Thursday based on Treasury Department data. Another ARM index, the six-month LIBOR, was 0.45 percent this week, 1 basis point lower than last Wednesday.

Last week — when fixed rates hit a record-low and the one-year ARM was 3 BPS higher — ARM share rose to 5.8 percent from 5.4 percent a week earlier based on the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended Oct. 15.

ARM share of applications is projected by Fannie to be 6 percent this quarter then steadily rise to 10 percent by the fourth quarter of 2011.

New mortgage activity moved lower this week based on the Mortgage Market Index, which fell to 325 from 331 in the week ended Oct. 14. The index reflects pricing inquiry activity by loan originators whose firms are clients of Mortech Inc.

But MBA’s survey which reflects last week’s activity, was down 11 percent on a seasonally adjusted basis — as were refinance applications. The purchase index was down 7 percent.

The average U.S. mortgage loan amount was $216,844 in the latest Mortgage Market Index report, lower than $222,567 last week. The highest average was in Washington, D.C.: $306,158. The U.S. Virgin Islands’ $103,960 average was the lowest in the country.

The share of new activity tied to refinance transactions eased to 62 percent this week from 63 percent last week, according to the Mortech-Mortgage Daily report. The latest tally reflected a 48 percent rate-term share and a 15 percent cashout share.

Fannie predicted that refinance share of originations will be 76 percent in the fourth quarter then fall to around two-thirds in the first quarter of 2011. Refinance share is expected to decline further to 37 percent by the end of next year.

Related Posts

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Up 92 BPS From Year Ago

Over the past year, weekly fixed interest rates on single-family loans have soared 92 basis points. But little change was reported from last week, and more of the same is expected. On conventional loans utilized to finance a home purchase with amounts up to the...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rate Forecasts Have Little Change Ahead

Thirty-year mortgage rates moved lower this past week and this past month. Short- and long-term forecasts have little movement ahead for mortgage rates. Ellie Mae Inc.'s Origination Insight Report | September 2018 indicated that average 30-year note rates on...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Soar, Could Sink in Next Report

An expected surge in mortgage rates came to fruition this week. The latest forecast has fixed rates tumbling in next week's report. A new index for adjustable-rate mortgages moved lower. A stunning 19-basis-point surge from the preceding week left average 30-year...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Dip, But Likely to Skyrocket

Mortgage rates retreated a modest amount just one week after climbing to a seven-year high. The next rate report, however, is likely to reflect significant escalation. Prospective 30-year borrowers using the LendingTree network during September were offered an average...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Little Changed, More of Same Ahead

Over the past week, there was little change in interest rates on home loans. During the next week, more of the same is likely. Recently rising rates have helped the Federal Home Loan Banks' earnings. Conventional mortgages with conforming loan amounts used to finance...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI