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Mortgage Rates Little Changed 4 Weeks, Could Fall


For the fourth week in a row, interest rates on residential loans moved little. But it looks like a decline could be ahead in the next report.

Freddie Mac reported in its Primary Mortgage Market Survey for the week ended Feb. 23 that 30-year fixed rates averaged 4.16 percent.

Rates on home loans were hardly different than the prior week, when the average was 4.15 percent. The average was 3.62 percent a year earlier.

National Association of Federally Insured Credit Unions Chief Economist Curt Long explained that minutes from the Federal Open Market Committee’s latest meeting didn’t provide much guidance about their plans.

“There was plenty to chew on for both hawks and doves, and with some significant data releases due before the committee’s next meeting, it is likely that the committee itself is unsure about which direction it is leaning,” Long said in a written statement. “The most likely scenario for the March meeting is that the committee will hold off on a rate hike with some of the more hawkish members objecting, thereby setting the stage for a rate increase in the second quarter.”

An improvement in the prices of mortgage-backed securities has mortgage rates as of Thursday lower than when Freddie conducted its survey, MBSQuoteline Director Joe Farr said in a written statement to Mortgage Daily.

A Mortgage Daily analysis of Treasury market activity suggests that fixed mortgage rates could be around 5 basis points less in Freddie’s next survey.

However, half of the panelists surveyed by for the week Feb. 23 to March 1 predicted rates will not move more than 2 BPS over the next week. A third expected an increase, and just 17 percent agreed with Mortgage Daily and projected a decline.

Fannie Mae predicted in its
Housing Forecast: February 2017 that 30-year fixed rates will average 4.2 percent during the first-three quarters of this year.

But the Mortgage Bankers Association projected in its latest MBA Mortgage Finance Forecast that 30-year rates will average 4.3 percent in the first quarter, 4.4 percent three months later and 4.6 percent in the third quarter.

In the
U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Feb. 17, jumbo interest rates were 6 BPS less than conforming rates, thinning from a negative 11 BPS the prior week..

Average 15-year fixed rates were 3.37 percent, up 2 BPS from the week ended Feb. 16. Fifteen-year rates were 79 BPS less than 30-year rates, not as wide of a spread as 80 BPS in the last report.

Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.16 percent, 2 BPS better than in the previous survey.

Hybrid ARMs will average 3.3 percent in the current quarter, 3.4 percent three months later and 3.5 percent in the second-half 2017, according to Fannie’s outlook.

The yield on the one-year Treasury note, which serves as an index for hybrid loans, closed Wednesday at 0.81 percent, down from 0.82 percent seven days earlier, according to Treasury Department data.

The six-month London Interbank Offered Rate, which is another ARM index, was 1.36 percent as of Wednesday, reported. LIBOR was up from 1.34 percent one week earlier.

The latest Mortgage Market Index report had ARM share at 10.8 percent, widening substantially from 6.8 percent the prior week.

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