Interest rates on residential loans held steady this past week. But an increase is likely in the next report unless tomorrow’s employment report is weak.
The Primary Mortgage Market Survey from Freddie Mac had fixed rates on 30-year mortgages averaging 3.42 percent in the week ended Oct. 6.
Although there was no change in long-term rates compared to the previous week, rates have declined from 3.76 percent in the same week last year.
“Over the past two weeks, mortgage rates have remained fairly flat while Treasury yields have fallen and risen,” Freddie Mac Chief Economist Sean Becketti stated in the report.
MBSQuoteline Director Joe Farr reported to Mortgage Daily that mortgage rates have risen since Freddie conducted its survey.
“Tuesday’s European Central Bank talk about tapering its bond purchases caused MBS prices to fall,” Farr said in a written statement. “Since rates rise as MBS prices fall, Thursday’s actual rate is a little higher than what Freddie reported.”
A Mortgage Daily analysis of Treasury market activity suggests that fixed mortgage rates could be around 7 BPS worse in the next survey from Freddie.
A rate increase of at least 3 BPS over the
next week was expected by 63 percent of panelists surveyed by Bankrate.com for the week Oct. 6 to Oct. 12. The remaining 38 percent predicted no change, and none forecasted a decline.
However, if tomorrow’s employment report
has substantially fewer than 175,000 jobs added for September, there will be downward pressure on mortgage rates.
“This Friday’s jobs report will provide clarity on whether or not mortgage rates follow the recent upward trend in Treasury yields,” Freddie’s Becketti said.
Interest rates on jumbo mortgages were 8 BPS more than conforming rates in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Sept. 30. The jumbo-conforming spread was the same one week prior.
Fifteen-year fixed rates averaged 2.72 percent in Freddie’s most-recent report, no different than in the week ended Sept. 29. Fifteen-year rates were 70 BPS less than 30-year rates, the same spread as in the previous survey.
At 2.80 percent, five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged a basis point less than in Freddie’s prior-week survey.
One-year Treasury-indexed ARMs were reported by HSH.com to be 2.50 percent as of Thursday, unchanged from seven days earlier. Freddie previously reported that one-year ARMs averaged 2.55 percent in the week ended Oct. 8, 2015.
The yield on the one-year Treasury note,
which is used to determine rate changes on one-year ARMs, closed Thursday at 0.65 percent, according to the Department of the Treasury, climbing from 0.59 percent a week earlier.
Another, less-utilized, ARM index — the six-month London Interbank Offered Rate — was 1.25 percent as of Wednesday, Bankrate.com reported. LIBOR inched up from 1.24 percent one week previous.
ARM share in the latest Mortgage Market Index report was 8.3 percent, widening from 6.0 percent the prior week.
