It was another bad week for interest rates on home loans. Mortgage rates have now deteriorated for five consecutive weeks.
A 10-basis-point jump from last week left borrowers on 30-year fixed-rate mortgages paying an average rate of 3.91 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended June 6.
The picture looks even less favorable when compared to the same week last year. At that point, the 30 year averaged 3.67 percent.
Thirty-year rates have increased every week since May 2, when the 30 year averaged 3.35 percent.
“Continuing market concerns that the Federal Reserve may slow its bond purchases amid a strengthening economy added upward pressure on mortgage rates this week,” Frank Nothaft, Freddie’s chief economist, said in the weekly report. “In its June 5th regional economic conditions report, known as the Beige Book, the Federal Reserve noted that overall economic activity increased at a modest to moderate pace over April and May in all its districts except for Dallas which indicated strong economic growth. In addition, pending home sales rose in April to its fastest pace since April 2010 and May’s consumer sentiment was revised upwards to its highest reading since July 2007.”
Thirty-year mortgage rates could be slightly better in Freddie’s next survey based on a Mortgage Daily analysis of this week’s Treasury market activity.
The 10-year Treasury note yielded an average of 2.12 percent in the days that Freddie surveyed its primary market lenders, while it fell to 2.08 percent Thursday, according to data reported by the Department of the Treasury.
However, tomorrow’s employment report could throw a monkey wrench into that forecast. A weaker-than-expected payroll report could send bond yields tumbling, while a surprise positive report could help mortgage rates continue their ascension.
Lower rates over the next week were expected by 46 percent of Bankrate.com panelists for the week June 6 to June 12. Rates aren’t expected to move more than 2 BPS based on 36 percent of the respondents, and just 18 percent predicted an increase.
In the U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended May 31, jumbo mortgages were priced 30 BPS higher than conforming loans. The jumbo-conforming spread widened from 26 BPS in the previous week.
Freddie said that the 15-year fixed-rate mortgage averaged 3.03 percent this week, just 5 BPS worse than the week ended May 30.
Borrowers who opted for shorter 15-year terms had a rate that averaged 88 BPS less than 30-year rates. The 15-year discount was better than 83 BPS in the last report.
At 2.74 percent, the five-year, Treasury-indexed, hybrid, adjustable-rate mortgage was 8 BPSÂ higher than in Freddie’s last report.
A 4-basis-point rise left the one-year Treasury-indexed ARM at 2.58 percent, according to Freddie. The one-year ARM was lower, however, than in the week ended June 7, 2012, when it averaged 2.79 percent.
One-year ARMs adjust based on the one-year Treasury note yield, which closed at 0.14 percent today, Treasury Data indicate. The one-year yield was 0.13 percent seven days earlier.
A 1-basis-point decline was recorded from a week prior for the six-month London Interbank Offered Rate, which Bankrate.com said was 0.41 percent as of Wednesday.
ARM applicants accounted for 5.1 percent of activity in the latest Mortgage Market Index report, a wider margin than 4.5 percent the previous week.
