Fixed mortgage rates worsened but are positioned to give back all of this week’s gain. Bank economists see mortgage rates jumping 25 basis points in the third quarter.
A six-basis-point increase from last week left 30-year fixed rates averaging 4.20 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended June 12.
Thirty-year mortgage rates were also higher than during the same week last year, when Freddie reported the average at 3.98 percent.
In the report, Freddie Mac Chief Economist Frank Nothaft highlighted last week’s employment report that had the U.S. workforce expanding by 217,000 jobs following a surge in April.
It looks like 30-year fixed rates could come in around 6 BPS better in Freddie’s next survey if this week’s Treasury market activity is any indication.
Based on yield tables published by the Department of the Treasury, the 10-year Treasury yield averaged 2.64 percent during Freddie’s survey period and fell to 2.58 percent Thursday.
But none of Bankrate.com’s survey panelists predicted a drop in rates. Instead, most forecasted that rates won’t move more than 2 BPS over approximately the next week, while 14 percent projected an increase.
Economists at the American Bankers Association predict that conventional mortgage rates will average 4.27 percent this quarter, 4.45 percent in the third quarter and 4.65 percent in the following three-month period.
Jumbo loans were priced 10Â BPS better than their conforming counterparts in the U.S. Mortgage Market Index report from LoanSifter/Optimal Blue and Mortgage Daily for the week ended June 6 Â The spread widened from 8 BPS in the previous report.
Fifteen-year fixed rates were 3.31 percent in Freddie’s report, 8 BPS worse than in the week ended June 5. Borrowers who opted for a shorter term were quoted rates that were 89 BPS lower than 30-year rates, not as good as the 91-basis-point spread seven days prior.
Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.05 percent, lurching from just 2.93 percent in the prior report.
No change from the previous week left one-year Treasury-indexed ARMs at 2.40 percent in Freddie’s survey. One-year ARMs averaged 2.58 percent in the week ended June 13, 2013.
Data from the Treasury Department indicated that the yield on the one-year Treasury closed Thursday at 0.10 percent. the same as seven days earlier.
Bankrate.com reported the six-month London Interbank Offered Rate at 0.32 percent as of Wednesday, the same as the prior week.
Out of all the pricing inquiries reflected in the Mortgage Market Index report, 12.4 percent were for ARMs, edging up from 12.2 percent in the previous report and more than doubling from 5.7 percent the same week last year.
