Mortgage Daily Logo

Mortgage Rates Retreat, Even Bigger Drop Possible


Interest rates on home loans were slightly lower this past week, and all indications are that an even bigger decline is ahead for fixed rates in the next report.

Residential loans that were closed and funded during August had an average 30-year note rate of 3.77 percent, 10 basis points less than the prior month.

A far more significant decline has been made compared to the same month last year, when the average 30-year note rate on loan originations was 4.31 percent.

Those findings were provided by Ellie Mae Inc. in its Origination Insight
Report August 2016

On conventional mortgages, last month’s average 30-year rate was 3.81 percent, while it was 3.75 percent on loans insured by the Federal Housing Administration and 3.56 percent on mortgages guaranteed by the Department of Veterans Affairs.

Freddie Mac reported in its Primary Mortgage Market Survey that 30-year fixed rates averaged 3.48 percent in the week ended Sept. 22. Thirty year rates slipped from 3.50 percent the prior week and tumbled from 3.86 percent a year prior.

MBSQuoteline Director Joe Farr noted in a written statement that prices on mortgage-backed securities have since gotten better.

“MBS prices have improved nicely since early in the week when the Freddie Mac survey was conducted,” Farr explained. “This means that mortgage rates on Thursday are a little better than what the survey shows.”

Fixed mortgage rates are likely to be around 5 BPS lower in Freddie’s next survey based on an analysis of Treasury market activity by Mortgage Daily.

A majority of panelists surveyed by for the week Sept. 22 to Sept. 28 agreed with Mortgage Daily’s prediction. A third expected that rates won’t move more than 2 BPS over the next week, and just 11 percent projected in increase.

Freddie expects average 30-year fixed rates to go from 3.5 percent during the current quarter to 3.6 percent in each of the subsequent three quarters, according to its
September 2016 Economic & Housing Market Forecast.

Fannie Mae predicted in its Housing Forecast: September 2016 that average 30-year fixed rates will climb from 3.4 percent in the third quarter to 3.5 percent in each of the following three quarters.

The jumbo-conforming spread was
6 BPS in the U.S. Mortgage Market Index from OpenClose and Mortgage Daily for the week ended Sept. 16, doubling from the previous week.

As of Freddie’s most-recent report, 15-year fixed rates averaged 2.76 percent, dipping from 2.77 percent in the week ended Sept. 15. At
72 BPS, the spread between 15- and 20-year rates was slightly thinner than 73 BPS in the previous report.

Freddie had five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 2.80 percent this week, 2 BPS better than the last report.

But in its forecast, Freddie predicts that hybrid ARMs will go from 2.9 percent in the third quarter to 3.2 percent each of the following two quarters.

Fannie predicts hybrid ARMs will average 2.8 percent this quarter and 2.9 percent in both the fourth quarter and the first-quarter 2017.

Data from indicate that the one-year Treasury-indexed ARM was 2.50 percent as of Thursday, sinking from 2.63 percent a week earlier. Freddie previously reported that the one-year ARM averaged 2.53 percent in the week ended Sept. 24, 2015.

The Consumer Financial Protection Bureau disclosed in a public filing that it began utilizing data from HSH Associates on July 17 for hybrid ARMs in determining average prime offer rates.

The yield on the one-year Treasury note, which serves as an index for one-year ARMs, was 0.60 percent as of Thursday, according to Treasury Department data, no different than seven days earlier.

Another less-utilized ARM index, the six-month London Interbank Offered Rate, was 1.26 percent as of Wednesday, reported. LIBOR was 1.25 percent seven days earlier.

Ellie’s data indicate that 4.1 percent of all loans closed during August were ARMs, down from 4.5 percent a month earlier and 5.6 percent a year earlier.

ARM share was
6.6 percent in the latest Mortgage Market Index report, wider than 6.1 percent a week earlier.

Related Posts

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Up 92 BPS From Year Ago

Over the past year, weekly fixed interest rates on single-family loans have soared 92 basis points. But little change was reported from last week, and more of the same is expected. On conventional loans utilized to finance a home purchase with amounts up to the...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rate Forecasts Have Little Change Ahead

Thirty-year mortgage rates moved lower this past week and this past month. Short- and long-term forecasts have little movement ahead for mortgage rates. Ellie Mae Inc.'s Origination Insight Report | September 2018 indicated that average 30-year note rates on...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Soar, Could Sink in Next Report

An expected surge in mortgage rates came to fruition this week. The latest forecast has fixed rates tumbling in next week's report. A new index for adjustable-rate mortgages moved lower. A stunning 19-basis-point surge from the preceding week left average 30-year...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Dip, But Likely to Skyrocket

Mortgage rates retreated a modest amount just one week after climbing to a seven-year high. The next rate report, however, is likely to reflect significant escalation. Prospective 30-year borrowers using the LendingTree network during September were offered an average...

Mortgage Rates Up 92 BPS From Year Ago

Mortgage Rates Little Changed, More of Same Ahead

Over the past week, there was little change in interest rates on home loans. During the next week, more of the same is likely. Recently rising rates have helped the Federal Home Loan Banks' earnings. Conventional mortgages with conforming loan amounts used to finance...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming paperwork has been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and furniture need to...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand-new mortgage loan can be a difficult task, especially for first-time homeowners.   After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first...


Don’t worry, we don’t spam