The release of the Federal Reserve minutes pushed up interest rates on home loans this past week. But there are some indications that fixed rates could ease.
Conventional, conforming 30-year fixed rates
averaged 3.94 percent in April, down a basis point from March, the Federal Housing Finance Agency reported.
For just the week ended May 26, fixed rates on 30-year home loans averaged 3.64 percent based on Freddie Mac’s Primary Mortgage Market Survey.
Thirty-year mortgage rates moved higher compared to the previous week’s report, when the average long-term rate came in at 3.58 percent.
The average was down, though, versus 3.87 percent in the week ended May 28, 2015.
“U.S. Treasury yields moved up in response to the Fed minutes release, which kept alive the possibility of a summer rate-hike,” Freddie Mac Chief Economist Sean Becketti said in the report. “Mortgage rates followed.”
Joe Farr, a director at MBSQuoteline, indicated in a written statement that prices on mortgage-backed securities have improved since Freddie’s survey was conducted — indicating that mortgage rates have also improved.
A Mortgage Daily analysis of Treasury market activity suggests that fixed rates in Freddie’s next survey could be around 3 BPS lower than in this week’s report.
But most of the panelists surveyed by Bankrate.com for the week May 26 to June 1 disagreed with Mortgage Daily’s forecast — with 45 percent predicting an increase of at least 3 BPS, another 45 percent projecting no change and just 10 percent expecting rates to decline.
Also diverging from the Mortgage Daily prediction was Bankrate.com Chief Financial Analyst Greg McBride.
“The Fed has definitely talked up the prospect of a summer rate hike,” McBride said in a written statement to Mortgage Daily. “Now we just need to sit back and see if the incoming economic data supports it. Don’t expect much movement until a consensus becomes clear.”
Jumbo rates were 9 BPS more than conforming rates in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended May 20. The jumbo-conforming spread widened from 6 BPS in the previous week’s report.
At 2.89 percent in Freddie’s survey, 15-year fixed rates averaged 8 BPS more than in the week ended May 19, 2016.
Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.87 percent in the latest report, 7 BPS worse than a week earlier.
One-year ARMs averaged 2.84 percent as of Thursday, according to HSH.com. The one year was up from 2.76 percent seven days previous. Freddie previously reported that one-year ARMs averaged 2.50 percent this week last year.
The index for the one-year ARM, the yield on the one-year Treasury note, closed
Thursday at 0.65 percent, a basis point higher than seven days previous, according to Treasury Department data.
Another
ARM index, the six-month London Interbank Offered Rate, was reported by Bankrate.com to be 0.96 percent as of Wednesday. LIBOR surged from 0.91 percent a week prior.
ARM share was 9.2 percent in the most-recent Mortgage Market Index report, widening from 8.1 percent seven days earlier.
