30-Year Under 4% and Less than Last Year’s Record


Mortgage Daily Staff

                                                 November 10, 2011

Fixed-rate 30-year mortgages averaged less than 4 percent this week and might not change much by next week’s report. The 30 year was better than a year ago when it had fallen to the lowest level on record at that point. Adjustable-rate mortgages were higher this week, and a European index used on subprime ARMs has been up eight weeks in a row.

Down just a single basis point from last week, the 30-year mortgage fell below 4 percent to average 3.99 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday.

The 30 year was down from a year earlier when it stood at 4.17 percent — the lowest level on record at the time.

Freddie surveys 125 mortgage lenders each week based on where rates stood on either Monday, Tuesday or Wednesday, and then reports its findings on Thursday. The average 10-year Treasury note yield for those three days last week was 2.07 percent, based on data delivered by the Department of the Treasury. The 10-year yield closed at 2.04 percent today, not much different than last week’s average and an indication that mortgage rates won’t too different in next week’s report from Freddie.

A plurality of panelists surveyed by Bankrate.com for the week Nov. 10 to Nov. 16 agreed with that assessment and predicted rates won’t move more than 2 BPS over the next seven days or so. But 36 percent forecasted a decline and 21 percent projected an increase.

The premium for a jumbo mortgage was 61 BPS in the U.S. Mortgage Market Index report from Mortech Inc. and MortgageDaily.com for the week ended Nov. 4. Jumbo loans were more expensive than the prior week, when the premium was 60 BPS.

Like the 30 year, Freddie said that the average 15-year fixed-rate mortgage eased 1 basis point from last week to land at 3.31 percent. Fifteen-year borrowers got a 69-basis-point discount over 30-year borrowers, the same as last week.

The story for ARMs was different, though. The five-year, Treasury-index, hybrid ARM inched up to 2.98 percent from 2.96 percent a week earlier.

The one-year Treasury-indexed ARM was 2.95 percent, climbing from 2.88 percent seven days earlier. But the one year was better than 3.26 percent a year earlier.

One-year ARM borrowers look to the yield on the one-year Treasury for rate adjustments. The Treasury Department reported that the one-year yield closed at 0.10 percent today, 1 basis point better than last Thursday.

A less widely used ARM index, the London Interbank Offered Rate, climbed to 0.64 percent as of Wednesday from 0.62 percent a week prior, according to Bankrate.com. It was the eighth consecutive week that the index was higher.

The increase in the LIBOR, which is the index for many subprime ARMs, reflects anxiety over European banks’ exposure to the sovereign debt of Greece, Ireland and Italy — which have all seen their cost of funds rise as their ability to repay bonds is in doubt.

ARM inquiries accounted for 5.83 percent of all activity in the latest Mortgage Market Index report, slipping from a 5.92 percent share the prior week.

Mortgage Daily Staff

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