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Fixed Mortgage Rates Slip, Could Stay There


Fixed interest rates on residential loans moved slightly lower this past week and could stay put. Adjustable rates, however, moved higher.

The Primary Mortgage Market Survey for the week ended Oct. 22 had 30-year fixed rates averaging 3.79 percent, Freddie Mac reported.

Thirty-year rates retreated from seven days prior, when the average was 3.82 percent, and a year prior, when the 30 year averaged 3.92 percent.

“Following Federal Reserve Governor Daniel Tarullo’s remarks last week Treasury yields dipped,” Freddie Mac Chief Economist Sean Becketti said in the report.

Over at MBSQuoteline, Joe Farr, a director, explained in a written statement that prices on mortgage-backed securities — and fixed mortgage rates — have improved since Freddie’s survey was conducted.

In the next survey, fixed rates are unlikely to move much, based on Mortgage Daily’s analysis of Treasury market activity.

An equal share of panelists — 43 percent — surveyed by for the week Oct. 22 to Oct. 28 predicted that mortgage rates would either move up at least three BPS or not change over the next week. Just 14 percent expected a downturn.

In its Housing Forecast: October 2015, Fannie Mae predicted that 30-year rates would be 3.9 percent in the current quarter and the first-quarter 2016 then rise to 4.0 percent the following three months.

Thirty year rates averaged 4.280 percent on closed loans in September, according to Ellie Mae Inc.’s Origination Insight Report. The average was off from 4.313 percent a month prior.

On conventional loans, 30-year rates were 4.348 percent last month, Ellie said, while they averaged 4.236 on mortgages insured by the Federal Housing Administration and 4.088 on loans guaranteed by the Department of Veterans Affairs.

The U.S. Mortgage Market Index report from OpenClose and Mortgage Daily indicated that interest rates on jumbo mortgages were 15 BPS less than on conforming loans for the week ended Oct. 16. The spread widened from a negative 12 BPS in the last report.

Freddie reported average 15-year fixed rates at 2.98 percent, five BPS better than in the week ended Oct. 15. Fifteen-year rates
were 81 BPS less than 30-year rates. The spread widened from 79 BPS in the last report.

Of all loans closed in September, 10.3 percent were 15-year mortgages, Ellie said. Fifteen-year share climbed from 9.8 percent the prior month.

Five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 2.89 percent in Freddie’s latest report, a basis point more than seven days earlier.

Fannie has hybrid ARMs averaging 3.0 percent in fourth-quarter 2015 and first quarter of next year then rising to 3.1 percent in the following three-month period.

At 2.62 percent, one-year Treasury-indexed ARMs were up eight BPS from a week prior, according to Freddie. Compared to the week ended Oct. 23, 2014, the one year was up 21 BPS.

One-year ARM rates will rise from 2.6 percent this quarter to 2.7 percent in the first-quarter 2016 and 2.8 percent the following three months.

The yield on the one-year Treasury note, which is used to determine rate-and-payment changes on one-year ARMs, closed Thursday at 0.23 percent,
a basis point more than seven days prior, the Department of the Treasury reported.

The six-month London Interbank Offered Rate, or LIBOR, was 0.52 percent as of Wednesday, reported. The index was unchanged from the prior Wednesday.

ARM rate locks accounted for 11.2 percent of all rate locks in the most-recent Mortgage Market Index report, off from 11.5 percent in the previous report.

Ellie said ARM share dropped to 5.3 percent last month from 5.6 percent in August.

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