Never before in the record-keeping annals of the Federal Home Loan Mortgage Corp. have fixed-rate mortgages been this low. The outlook is for more of the same.
The average 30-year fixed-rate mortgage fell to 3.84 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended May 3 — breaking the 3.87 percent record set in the week ended Feb. 9, 2012.
“Signs of slowing economic growth and inflation remaining subdued allowed yields on Treasury bonds to ease somewhat and brought most mortgage rates to new all-time record lows this week,” Frank Nothaft, the chief economist at Freddie, said in the report. “Real gross domestic product rose at an annualized rate of 2.2 percent in the first quarter of this year, down from the previous quarter of 3.0 percent and below the market consensus forecast of 2.5 percent.”
The 30 year averaged 3.88 percent a week earlier and 4.71 percent a year earlier, according to Freddie.
A look at this week’s Treasury market activity indicates that mortgage rates won’t be any different in Freddie’s next survey. The yield on the 10-year Treasury note averaged 1.96 percent during the days that Freddie surveyed its 125 lenders, while it closed at that same level today, according to data reported by the Department of the Treasury.
Half of Bankrate.com panelists surveyed for the week May 3 to May 9 agreed that rates won’t move much during the next week or so. Another 40 percent predicted mortgage rates will rise at least 3 BPS, while just 10 percent foresaw a decrease ahead.
Jumbo borrowers were priced at a 53-basis-point premium over conforming borrowers in the U.S. Mortgage Market Index from Mortech Inc. and Mortgage Daily for the seven days ended April 27. The jumbo-conforming spread was 55 BPS in the prior report.
Also falling to an all-time low was the 15-year fixed-rate mortgage, which declined to 3.07 percent in Freddie’s latest survey from 3.12 percent the prior week. The prior record, 3.11 percent, was set on April 12. The discount for a 15-year mortgage improved to 77 basis points from last week’s spread of 76 BPS.
Freddie reported the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage at 2.85 percent, the same as in the prior report.
The one-year Treasury-indexed ARM, however, fell 4 BPS to 2.70 percent in Freddie’s survey. The one year averaged 3.14 percent in the same week during 2011.
The yield on the one-year Treasury note, which serves as the index for the one-year ARM, closed Thursday at 0.19 percent, 1 basis point higher than last Thursday, based on Treasury Department data.
No change was recorded for the six-month London Interbank Offered Rate. Bankrate reported that LIBORÂ was 0.73 percent this week and last week.
ARM share inched up to 4.824 percent in the latest Mortgage Market Index report from 4.785 percent the prior week.
