Despite a broadly expected rate increase from the Federal Reserve Board’s Federal Open Market Committee, fixed mortgage rates were little changed. But a decline could be in the offing.
The Primary Mortgage Market Survey for the week ended Dec. 14 had 30-year fixed rates on single-family loans averaging 3.93, Freddie Mac reported.
That was barely any different than last week, when the average was 3.94 percent. But long-term mortgages rates have fallen 23 basis points from the same week last year.
“As widely expected, the Fed increased the federal funds target rate this week for the third time in 2017,” Freddie Mac Deputy Chief Economist Len Kiefer said in the report. “The market had already priced in the rate hike so long term interest rates, including mortgage rates hardly moved.”
Curt Long, chief economist for the National Association of Federally Insured Credit Unions, said in a written statement, “The committee struck a mostly positive note in its statement and appears poised for further rate hikes in the first half of 2018.”
MBSQuoteline’s Joe Farr explained in a note to Mortgage Daily that mortgage rates are now around 3 BPS lower than what Freddie reported.
A Mortgage Daily analysis of Treasury market activity suggests fixed rates could be around 3 BPS lower in Freddie’s next survey.
But a plurality of panelists surveyed by Bankrate.com for the week Dec. 13 to Dec. 20 predicted rates won’t move over the next week. Thirty percent expected rates will rise at least 3 BPS, and another 30 percent projected a decline.
LendingTree Chief Economist Tendayi Kapfidze expects that 30-year fixed rates will stay between 3.5 percent and 4.5 percent during 2018.
In the U.S. Mortgage Market Index report from Mortgage Daily and OpenClose for the week ended Dec. 8, jumbo interest rates were 16 BPS higher than conforming rates, the same spread as the prior week.
Freddie’s survey had 15-year fixed rates averaging
3.36 percent, no different than in the week ended Dec. 7. The spread between 15- and 30-year rates thinned to 57 BPS from 58 BPS the preceding week.
At 3.36 percent, average rates on five-year, Treasury-indexed, hybrid adjustable-rate mortgages were up a basis point up from the last report, Freddie reported.
LendingTree’s Kapfidze noted in a written statement that hybrid ARMs are the highest they’ve since 2011 and will pass through most of the Fed’s rate increase to reach new post-crisis highs.
“Home equity loans also move more closely with the Fed Funds rate and will pass through most of the 25 bps increase,” Kapfidze added. “Borrowers with outstanding ARM loans will see their rates increase at the annual reset and home equity borrowers will see immediate increases in their interest rates.”
The one-year Treasury note yield
closed Thursday at 1.70 percent, jumping from 1.67 percent seven days prior, according to Treasury Department data.
At 1.75 percent as of Wednesday, the
six-month London Interbank Offered Rate was up 4 BPS from the previous Wednesday, Bankrate.com reported.
ARM share was 9.9 percent in the most-recent Mortgage Market Index report, wider than 9.5 percent a week prior.
