Mortgage Rates Sink, Remain Volatile


Mortgage Daily Staff

                                                 January 8, 2015

Fixed rates on home loans plunged to the lowest level since 2013. Although signs point to an increase in the next report, the forecast is volatile due to an upcoming key economic report.

At 3.73 percent, average 30-year fixed rates for the week ended Jan. 8 were lower than they’ve been at any time since the week ended May 23, 2013, when the average was 3.59 percent.

Historical data from Freddie Mac’s Primary Mortgage Market Survey indicate that the all-time low for the 30 year was reached in the week ended Nov. 21, 2012, when the average was 3.31 percent.

Thirty-year fixed rates averaged 3.87 percent in the week ended Dec. 31, 2014, and 4.51 percent in the week ended Jan. 9, 2013.

Mortgage Daily’s analysis of Treasury market activity points to slightly higher rates in Freddie’s next survey. Based on 10-year Treasury data from the Department of the Treasury, fixed rates could be around 4 basis points higher.

However, tomorrow’s employment report presents interest rate volatility. If significantly more than 250,000 jobs were added in December, then rates could rise even more. But an increase of significantly fewer than 250,000 jobs could pull rates lower.

A majority of panelists surveyed by for the week Jan. 8, to Jan. 14, however, projected that rates will decline at least 3 BPS over the next week. An increase was predicted by 36 percent, and 9 percent forecasted no change.

Jumbo rates were 12 BPS more than conforming rates in the U.S. Mortgage Market Index report from LoanSifter/Optimal Blue and Mortgage Daily for
the week ended Jan. 2, the same as seven days prior.

Freddie reported average 15-year fixed rates at 3.05 percent, 10 BPS better than in the previous report. Fifteen-year rates averaged
68 BPS less than their 30-year counterparts, retreating from the 72-basis-point spread a week earlier.

Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.98 percent in Freddie’s survey, 3 BPS less than in the previous week.

At 2.39 percent, one-year Treasury-indexed ARMs were just a basis point better than in the prior report. One-year ARMs were down 17 BPS from the same week last year.

One-year ARMs adjust based on the one-year Treasury yield, which slipped to 0.23 percent Thursday from 0.25 percent seven days previous, according to the Treasury Department data.

Another ARM index, the six-month London Interbank Offered Rate — or LIBOR —
was 0.36 percent as of Wednesday, unchanged from one week earlier, reported.

ARM share in the most-recent Mortgage Market Index report was 9.2 percent, tumbling from 9.8 percent a week earlier.

Mortgage Daily Staff

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