Mortgage rates didn’t budge this past week, and the short-term outlook is totally dependent on tomorrow’s comments from the Federal Reserve Board.
Thirty-year fixed rates averaged 3.43 in Freddie Mac’s Primary Mortgage Market Survey for the week ended Aug. 25, no different than one week prior.
But a significant improvement has been made on residential interest rates compared to one year prior, when the 30 year was reported at 3.84 percent.
“Markets are erring on the side of caution ahead of the second estimate for second-quarter GDP and Fed Chair Janet Yellen’s speech on Friday,” Freddie Mac Chief Economist Sean Becketti commented in the report.
Joe Farr, director at MBSQuoteline, reported to Mortgage Daily that based on mortgage-backed securities prices — mortgage rates have moved little since this week’s survey was conducted.
Fixed mortgages rates could be approximately 3 BPS higher in Freddie’s next survey based on a Mortgage Daily analysis of Treasury market activity.
But three-quarters of panelists surveyed by Bankrate.com for the week Aug. 24 to Aug. 30 predicted mortgage rates won’t move over the next week. A quarter agreed with Mortgage Daily’s forecast, and none expected a decline.
“Mortgage rates have held in place all month long,” Bankrate.com Chief Financial Analyst Greg McBride said in a written statement to Mortgage Daily. “Now all eyes are on Janet Yellen. If she hints at a rate hike, mortgage rates will move up slightly. If she is hesitant and voices concern about the election uncertainty, mortgage rates will pull back.”
Thirty-year fixed rates are projected to average 3.5 percent during the third quarter in the Mortgage Bankers Association’s MBA Mortgage Finance Forecast. The average is then expected to climb to 3.7 percent in the fourth quarter and 3.9 percent three months later.
Jumbo rates were priced 10 BPS higher than conforming rates in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Aug. 19. The jumbo-conforming spread was the same as in the previous week’s report.
No change from the week ended Aug. 18 left 15-year fixed rates averaging 2.74 percent in Freddie’s report. The spread between 15- and 30-year rates was also unchanged from the prior week at 69 BPS.
Freddie’s survey had five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 2.75 percent, a basis point more than in the previous report.
One-year ARMs were 2.64 percent as of Thursday, HSH.com reported, soaring from 2.29 percent seven days earlier. One-year ARMs averaged 2.62 percent in the week ended Aug. 27, 2015, Freddie previously reported.
Treasury Department data indicate that the index for the one-year ARM, the yield on the one-year Treasury note, closed Thursday at 0.60 percent, rising from 0.58 percent one week prior.
The six-month London Interbank Offered Rate, which is used as an index on a small share of ARMs, was 1.23 percent as of Wednesday, according to Bankrate.com, climbing 4 BPS from seven days previous.
In the latest Mortgage Market Index report, ARM share was 7.3 percent, widening from 6.7 percent a week earlier.
