Fixed mortgage rates fell this past week, and the 30-year loan sits just 10 basis points above its all-time low. The other good news is that there is no upward pressure on mortgage rates at the moment.
A 7-basis-point drop from last week left the average 30-year fixed-rate mortgage at 3.59 percent for the week ended Aug. 30, according to Freddie Mac. The lowest level ever recorded for the 30 year was 3.49 percent in the week ended July 26.
The 30 year averaged 4.22 percent in the same week last year.
“Treasury bond yields fell, allowing mortgage rates to follow, after the release of the July 31st and August 1st minutes of the Federal Reserve’s monetary policy committee,” Freddie Mac Chief Economist Frank Nothaft explained in the report. “Committee members agreed that economic activity had decelerated more in recent months than they had anticipated at their last meeting in June. Some members even saw room for additional stimulus fairly soon if needed.”
For the month of July, 30-year rates on purchase-money mortgages averaged 3.84 percent, 4 BPS below June’s average, the Federal Housing Finance Agency reported.
The 30-year mortgage isn’t likely to move much based on this week’s Treasury market activity. The 10-year yield averaged 1.65 percent during the period when Freddie surveyed its lenders for this week’s interest rates, while the yield closed at 1.63 percent today, according to data from the Treasury Department.
Mortgage rates will not increase over the next week or so, based on 72 percent of the panelists surveyed by Bankrate.com for the week Aug. 20 to Sept. 5. An increase of at least 3 BPS was forecasted by 28 percent, while the rest were evenly split between expectations that rates will fall or not change at all.
The difference in rates between a jumbo mortgage and a conforming loan was 63 BPS in the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily for the week ended Aug. 24. The jumbo-conforming spread was slightly wider than 62 BPS in the prior report.
Freddie reported the average 15-year fixed-rate mortgage at 2.86 percent, 3 BPS better than in the prior survey. Fifteen-year loans were priced 73 BPS better than 30-year loans, not as good as the 77-basis-point discount last week.
At 2.78 percent, the five-year, Treasury-indexed, adjustable-rate mortgage was off 2 BPS from seven days earlier.
The Treasury-indexed one-year ARM averaged 2.63 percent, falling 3 BPS from the prior survey and 26 BPS below the same week last year.
Existing one-year ARM borrowers should be happy with this week’s market activity. The yield on the one-year Treasury note — which is the index used to determine ARM rate and payment adjustments — fell to 0.17 percent Thursday from 0.19 percent a week earlier based on Treasury Department data.
Borrowers whose ARMs are tied to the six-month London Interbank Offered Rate also saw a decline in their index, with the LIBORÂ falling to 0.71 percent on Wednesday from 0.72 percent seven days prior, Bankrate.com reported.
ARM share remained slim at 2.8 percent in the latest Mortgage Market Index report.
