For several weeks now, fixed interest rates on residential loans have continued to improve. Mortgage rates could ease further.
Thirty-year fixed rates averaged 4.622 percent in April based on Ellie Mae Inc.’s latest Origination Insight Report.
The average was down from 4.604 percent a month earlier but has substantially ascended from a year earlier, when it was 3.808 percent.
The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, reported that 30-year conforming rates averaged 4.53 percent last month, 2 basis points more than in March.
More recently, Freddie reported in its Primary Mortgage Market Survey for the week ended May 29 that 30-year fixed rates slipped to 4.12 percent from 4.14 percent in the previous report. It was the fifth consecutive week of improvement and the lowest average since the week ended Oct. 31, 2013, when 30-year rates were 4.10 percent.
Freddie Mac Chief Economist Frank Nothaft suggested in the report that a weaker-than-expected existing home sales report played a role in the decline.
In the same week last year, 30-year rates were 3.81 percent.
A Mortgage Daily analysis of Treasury market activity points to modestly lower rates in Freddie’s next report. Data from the Treasury Department indicate that the yield on the 10-year Treasury note — which is tracked by fixed mortgage rates — averaged 2.48 percent during the period Freddie surveyed lenders for this week’s report. The 10-year yield closed at 2.45 percent Thursday.
Half of the panelists surveyed by Bankrate.com for the week May 29 to June 4 projected that mortgage rates will decline at least 3 BPSÂ over the next week. Another 40 percent saw no changes ahead, and just 10 percent predicted an increase.
The U.S. Mortgage Market Index report from LoanSifter-Optimal Blue and Mortgage Daily for the week ended May 23 indicated that jumbo mortgages were 10 BPS cheaper than conforming loans. The negative jumbo-conforming spread widened from 7 BPS in the previous report.
Freddie’s report indicated that 15-year mortgages averaged 3.21 percent, 4 BPS better than last week. The spread between 15- and 30-year mortgages widened to 91 BPS from 89 BPS in the last report.
Ellie reported that 12.2 percent of April originations were 15-year mortgages.
Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.96 percent in Freddie’s report, the same as in the week ended May 22.
One-year ARMs averaged 2.41 percent, 2 BPS better than in Freddie previous survey. The average was 2.54 percent in the week ended May 30, 2013.
One-year ARMs adjust based on the yield of the one-year Treasury note, which crept up to 0.10 percent Thursday from 0.09 percent a week earlier, according to Treasury Department data.
A less competitive ARM index, the six-month London Interbank Offered Rate, slipped to 0.32 percent Wednesday from 0.33 percent seven days prior, Bankrate.com reported.
ARMs accounted for 7.6 percent of April production, according to Ellie. ARM share was up from 7.4 percent a month earlier and has more than doubled from 3.2 percent a year earlier. Ellie’s data is based on closed loan production.
In the latest Mortgage Market Index report — which is based on pricing inquiries — ARM share was 12.8 percent, not quite as wide as 13.2 percent seven days prior.
