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Mortgage Rates Surge, Could Stay Higher


For the second week in a row, fixed rates on home loans deteriorated — and there is little chance that they will move down in the next report.

Thirty-year fixed rates averaged 3.98 percent in the Primary Mortgage Market Survey from Freddie Mac for the week ended Nov. 12.

The 30-year average increased from the previous week, when it rose to 3.87 percent, but was down from 4.01 percent the same week last year.

Freddie Mac Chief Economist Sean Becketti attributed the rise to a strong employment report.

“A surprisingly strong October jobs report showed 271,000 jobs added and wage growth of 0.4 percent from last month, exceeding many experts’ expectations. … There is only one more employment report before the December FOMC meeting, which will have major implications on whether we see a rate hike in 2015,” Becketti stated in the report.

Joe Farr, director at MBSQuoteline, said in a written statement that Thursday’s rates are a little higher than
in Freddie’s survey.

An analysis of Treasury market activity by Mortgage Daily suggests that fixed rates won’t be much different in Freddie’s next survey, maybe a basis point or two less.

An equal share — 45 percent — of panelists surveyed by for the week Nov. 12 to Nov. 18 predicted that rates will either rise at least three BPS or not move. Just 10 percent forecasted a decline.

Jumbo interest rates were 15 BPS less than conforming rates in the U.S. Mortgage Market Index report from OpenClose and Mortgage Daily for the week ended Nov. 6. The jumbo-conforming spread was no different than one week prior.

On 15-year mortgages, Freddie said fixed rates averaged 3.20 percent, 11 BPS worse than in the week ended Nov. 5. The spread between 15- and 30-year rates
was 78 BPS, the same as last week.

Freddie reported that five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaged 3.03 percent in the latest report, seven BPS more than in the prior survey.

One-year Treasury-indexed ARMs averaged 2.65 percent, three BPS worse than a week earlier and 22 BPS more than in the week ended Nov. 13, 2014.

One-year ARMs adjust based on the one-year Treasury yield, which shot up to 0.51 percent Thursday from 0.42
percent one week prior, the Department of the Treasury reported.

Another, less-utilized, ARM index, the six-month London Interbank Offered Rate — or LIBOR —
jumped to 0.59 percent as of Wednesday from 0.56 percent seven days earlier, reported.

Rate locks for ARMs made up 11.5 percent of all rate locks tracked in the latest Mortgage Market Index report. ARM share widened from 9.7 percent in the previous week’s report.

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