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Mortgage Rates Hold, Could Inch Up

Rates

Mixed economic data helped keep long-term fixed interest rates on residential loans from moving this past week. Rates might inch up in the next report — though an upcoming economic report could significantly alter that forecast.

At 3.87 for the week ended June 4, interest rates on 30-year mortgages were no different than they were one week prior.

Long-term fixed rates, which were reported Thursday in Freddie Mac’s Primary Mortgage Market Survey, have fallen from 4.14 percent one year prior.

“Mortgage rates were little changed for the week following mixed economic data before bond yields began moving higher Wednesday afternoon,” Freddie Mac Deputy Chief Economist Len Kiefer explained in the report. “Although real GDP growth was revised down to a negative 0.7 percent annualized rate, the Institute for Supply Management reported a modest growth in the manufacturing sector in May.

“If the Wednesday surge of Treasury yields persists, the impact on mortgage rates is likely to result in a bout of affordability shock to many housing markets across the country.”

MBS Quoteline Director Joe Farr explained in a written statement that fixed rates have surged another 10 basis points since Freddie conducted its survey based on prices of mortgage-backed securities.

Mortgage Daily’s analysis of Treasury market activity suggests that fixed mortgages rates could be slightly higher in Freddie’s next survey.

A plurality of panelists surveyed by Bankrate.com for the week June 4 to June 10 predicted mortgage rates will move at least three BPS higher over the next week. Another 36 percent expected a decline, while 18 percent projected no change.

However, the Labor Department’s release tomorrow of monthly employment data could create volatility — pushing rates higher if the report is strong or pulling down rates if data is weak.

Jumbo rates were 18 BPS higher than conforming rates in the Mortgage Market Index for the week ended May 29. The jumbo-conforming spread widened from 17 BPS the previous week.

Freddie reported average 15-year fixed rates at 3.08 percent, falling three BPS from the week ended May 28. That caused the spread between 15- and 30-year rates to widen to 79 BPS from 76 BPS in the last report.

A six-basis-point increase from seven days earlier left Treasury-indexed, hybrid, adjustable-rate mortgages averaging 2.96 percent in Freddie’s most-recent survey.

One-year Treasury-indexed ARMs averaged 2.59 percent, nine BPS worse than in Freddie’s last report. The one year averaged 2.40 percent in the week ended June 5, 2014.

Rates on one-year ARMs
adjust based in movement in the yield on the one-year Treasury note, which inched up to 0.27 percent Thursday from 0.26 percent in seven days prior, according to Treasury Department data.

Some
ARMs adjust based on the six-month London Interbank Offered Rate. LIBOR was 0.42 percent as of Wednesday, according to Bankrate.com, easing from 0.43 percent one week prior.

ARM share fattened to 9.3 percent in the most-recent Mortgage Market Index report from 9.0 percent one week prior.

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