As fixed rates on conforming mortgages rose, jumbo rates were less than their conforming counterparts for the second week in a row.
At 4.33 percent, thirty-year fixed rates averaged 6 basis points more than they did last week, according to Freddie Mac’s Primary Mortgage Market Survey for the week ended April 24.
McLean, Va.-based Freddie said that 30-year rates have increased 93 BPS compared to the same week last year.
“Existing home sales were essentially flat with a 0.2 percent decline in March to a seasonally adjusted annual rate of 4.59 million,” Freddie Mac Chief Economist Frank Nothaft noted in the report. “However, new home sales fell nearly 15 percent in March to an annual rate of 384,000, well below consensus.”
Loan originators can expect little change in fixed rates in Freddie’s next report based on Treasury market activity.
The yield on the 10-year Treasury note, which is tracked by fixed mortgage rates, averaged 2.72 percent during the days when Freddie was surveying lenders, Treasury Department data indicated. The 10-year yield closed at 2.70 percent on Thursday.
But half of the panelists surveyed by Bankrate.com for the week April 24 to April 30 predicted rates will move up at least 3 BPS over the next week. The rest were evenly split over whether rates would decline or stay where they are now.
Fannie Mae projected in its Housing Forecast: April 2014 that 30-year rates will move from 4.5 percent in the second quarter to 4.6 percent during the following two quarters.
The U.S. Mortgage Market Index from LoanSifter and Mortgage Daily for the week ended April 18 indicated that jumbo mortgage rates were 2 BPS less than conforming rates. The jumbo conforming spread widened from a negative one basis point a week earlier.
Like 30-year conforming mortgages, 15-year fixed rates were up 6 BPS from the week ended April 17 to land at 3.39 percent in Freddie’s latest report. There was no change from the previous report in the 94-basis-point spread between 15- and 30-year rates.
Freddie had five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 3.03 percent, the same as last week.
Fannie’s prediction is that hybrid ARMs will average 3.2 percent during the current quarter then rise 10 BPSÂ each of the following three quarters.
One-year Treasury-indexed ARMs averaged 2.44 percent, no different than in Freddie’s last report. One-year ARM rates were 2.62 percent in the week ended April 25, 2013.
In Fannie’s outlook, one-year ARMs are expected to average 2.5 percent in the second quarter then rise 10 BPS each of the following three quarters.
Rates and payments on one-year ARMs adjust according to the yield on the one-year Treasury note, which closed at 0.10 percent today, a basis point less than seven days ago.
No week-over-week change for another ARM index, the six-month London Interbank Offered Rate, left LIBOR at 0.32 percent, Bankrate.com reported.
ARM share widened to 13.7 percent in the most recent Mortgage Market Index report from 13.5 percent the previous week.
Fannie predicts ARM share will climb from 10 percent in the current quarter to 12 percent in the following three-month period and 13 percent in the fourth quarter.
