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Mortgage Rates Rise But Might Dip

Rates

Week-over-week escalation in fixed interest rates on residential loans is likely to be followed by a modest retreat in next week’s rate report.

Interest rates on conventional, conforming, first-lien, 30-year mortgages to prime borrowers averaged 3.47 percent in the week ended Oct. 13.

That was based on the Primary Mortgage Market Survey from Freddie Mac. The survey was conducted on Tuesday and Wednesday.

Thirty-year rates were elevated from 3.42 percent the prior week and 3.82 percent a year prior.

“This week the 10-year Treasury yield continued its climb as an increasing number of financial market participants foresee a December rate hike after a series of positive economic data releases,” Freddie Mac Chief Economist Sean Becketti said in the report.

Joe Farr, director at MBSQuoteline, said in a written statement that prices on mortgage-backed securities have moved little since Freddie conducted the survey, indicating that interest rates on residential loans have also hardly changed.

A Mortgage Daily analysis of Treasury market activity suggests that fixed rates could be around 3 BPS lower in Freddie’s next survey.

But two-thirds of panelists who were surveyed by Bankrate.com for the week Oct. 13 to Oct. 19 expected rates to increase at least 3 BPS over the next week, while a third predicted no change, and none forecasted a decline.

Interest rates on jumbo mortgages were 8 BPS less than conforming rates in the the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Oct. 7. The jumbo-conforming spread was unchanged from the prior week.

Fifteen-year fixed rates averaged 2.76 percent in Freddie’s most-recent survey, 4 BPS higher than in the prior report. Fifteen-year rates were
71 BPS higher than 30-year loans, up from 70 BPS in the last survey.

Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.82 percent, rising 2 BPS from the week ended Feb. 6.

At 2.80 percent as of Thursday,
one-year Treasury-indexed ARMs soared from 2.50 seven days earlier, according to data reported by HSH.com. One-year ARMs were previously reported by Freddie at 2.54 percent in the week ended Oct. 15, 2015.

One-year ARMs adjust based on the one-year Treasury note yield,
which the Department of the Treasury reported at 0.66 percent as of Thursday, inching up from 0.65 percent seven days prior.

Another ARM index, the six-month London Interbank Offered Rate, was 1.26 percent as of Wednesday, according to Bankrate.com. LIBOR was 1.25 percent as of the previous Wednesday.

ARM share
thinned to 6.9 percent in the most-recent Mortgage Market Index report from 8.3 percent in the previous report.

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