Concerns about inflation, or the lack thereof, helped to pull down long-term rates on home loans to the lowest level since last year. Signs point to little or no change in the next report.
Thirty-year fixed rates on single-family loans averaged 3.86 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Aug. 24.
That was the lowest average for long-term rates on residential loan since the week ended Nov. 10, 2016, when 30-year rates were reported at 3.57 percent.
Concerns about lagging inflation pulled rates lower, Freddie Mac Chief Economist Sean Becketti said in the report.
Freddie had 30-year rates at 3.89 percent in the week ended Aug. 17. But the average has increased from the week ended Aug. 25, 2016, when it was 3.43 percent.
A Mortgage Daily analysis of Treasury market activity suggests that long-term mortgage rates are unlikely to be much different in the next survey.
A majority of panelists surveyed by Bankrate.com for the week Aug. 23 to Aug. 30 agreed with Mortgage Daily and predicted rates won’t move more than 2 BPS over the next week. Thirty-one percent expected an increase, and 15 percent projected a decline.
In Freddie’s August 2017 Economic & Housing Market Forecast, 30-year fixed rates are predicted to average 3.9 percent in the third and fourth quarters of this year.
Another forecast, the Mortgage Bankers Association’s MBA Mortgage Finance Forecast, has 30-year fixed rates averaging 4.1 percent this quarter then climbing 20 BPS every three months through the third-quarter of next year.
Jumbo interest rates were 7 BPS less than conforming rates in the the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Aug. 18. The spread thinned from 8 BPS in the prior seven-day period.
In Freddie’s survey, 15-year fixed rates averaged 3.16 percent, no different than a week earlier.
The spread between 15- and 30-year rates narrowed to 70 BPS from 73 BPS in the last report.
Five-year, Treasury-indexed, hybrid adjustable-rate mortgages averaged 3.17 percent, edging up a basis point, according to Freddie’s survey.
Freddie predicts hybrid ARMs will average 3.1 percent in the current and fourth quarters.
Department of Treasury data indicate the the yield on the one-year Treasury note — which is utilized to determine rate changes on hybrid ARMs — closed Thursday at 1.23 percent, a basis point off the preceding Thursday’s close.
Bankrate.com reported that the six-month London Interbank Offered Rate was 1.46 percent as of Wednesday, edging up from 1.45 percent seven days earlier.
ARM share in the most-recent Mortgage Market Index report was 10.5 percent, more narrow than 13.3 percent the previous week.
