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Mortgage Rates Jump, Further Deterioration Likely

Rates

Fixed interest rates on residential loans surged this past week, and all indications are that mortgage rates are likely to head even higher.

In the Primary Mortgage Market Survey for the week ended Nov. 5, Freddie Mac reported average 30-year fixed rates at 3.87 percent.

Thirty-year rates were up 11 basis points compared to seven days previous but declined 15 BPS compared to the same week a year ago.

“Treasury yields climbed nearly 20 basis points over the past week, capturing the market movement following last week’s FOMC meeting,” Freddie Mac Chief Economist Sean Becketti said in the report.

MBSQuoteline Director Joe Farr said in a written statement that mortgage rates are even higher now.

“Mortgage rates have risen a little more since Monday and Tuesday when this week’s Freddie Mac survey was conducted,” Farr said.

Based on Mortgage Daily’s analysis of Treasury market activity, fixed mortgage rates could be around three BPS higher in Freddie’s next survey.

Four-fifths of panelists surveyed by Bankrate.com for the week Nov. 5 to Nov. 11 expected mortgage rates to increase at least three BPS. The remaining 20 percent were evenly split over whether rates will fall or stay where they are at.

Even Freddie’s Becketti speculated that a rate rise in on the horizon.

“Recent commentary suggests interest rates may rise in the near future,” Becketti explained. “Janet Yellen referred to a December rate hike as a ‘live possibility’ if incoming information supports it.”

But a weak jobs report tomorrow could nullify the predictions that rates will increase.

Becketti noted that the October jobs report will be a crucial factor influencing the FOMC’s decision.

Freddie reported average 15-year fixed rates at 3.09 percent,
11 BPS higher than in the week ended Oct. 29. Rates on 15-year mortgages were 78 BPS lower than 30-year rates. The spread was no different than in the prior survey.

At 2.96 percent, five-year, Treasury-indexed, hybrid, adjustable-rate mortgages were seven BPS higher than seven days previous, Freddie reported.

One-year ARMs averaged 2.62 percent in Freddie’ latest survey, eight BPS more than a week earlier and 17 BPS higher than in the week ended Nov. 6, 2014.

One-year ARMs adjust based on the one-year Treasury note yield, which closed at 0.42 percent
Thursday, nine BPS higher than one week prior, according to Treasury Department data.

The six-month London Interbank Offered Rate — or LIBOR — was 0.56 percent this week, climbing from 0.53 percent one week earlier.

Mortgage Daily’s Mortgage Market Index report for the week ended Oct. 30 had ARM share at 9.7 percent, tumbling from 12.6 percent one week earlier. The index reflects average per-user rate locks by clients of OpenClose.

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