Mortgage rates ascended this week and could see further increases. However, two wild cards make for an uncertain outlook.
Freddie Mac reported in its Primary Mortgage Market Survey for the week ended Sept. 5 that 30-year fixed-rate mortgages averaged 4.57 percent.
A week earlier, the secondary lender reported the 30 year at 4.51 percent, while it was 3.55 percent as of a year earlier.
Freddie Mac Chief Economist Frank Nothaft attributed the higher rates to signs of a stronger economic recovery.
“Real GDP was revised upwards to 2.5 percent growth in the second quarter of this year,” Nothaft said. “In addition, residential construction spending rose for a ninth consecutive month in July. Lastly, the manufacturing industry expanded by the fastest pace in August since June 2011.”
Thirty-year rates are poised to jump another 10 BPS in Freddie’s next survey based on an analysis of Treasury Department data.
At 2.98 percent, the yield on the 10-year Treasury note closed Friday 10 BPS higher than the average during the days that Freddie surveyed primary lenders for this week’s report.
However, mortgage rates remain volatile due to tensions over potential action in Syria.
Also adding to rate volatility is tomorrow’s employment report. If it is reported that more than 170,000 jobs were added in August, then mortgage rates are likely to rise. But an increase of less than 150,000 could help pull rates lower.
A plurality of panelists surveyed by Bankrate.com for the week Sept. 5 to Sept. 11 saw no changes ahead for the next week in mortgage rates. Just a third projected that rates will increase at least 3 BPS, and a quarter forecasted a downturn.
In the most recent U.S. Mortgage Market Index report, jumbo clients were quoted rates that were 26 BPS higher than average conforming rates, not much different than the 25-basis-point jumbo-conforming spread reported the prior week.
Freddie reported the average 15-year fixed rate at 3.59 percent, 5 basis points worse than in the week ended Aug. 29. Fifteen-year loans became a little more attractive this week as they garnered a 98-basis-point discount over 30-year mortgages — improving from the 97-basis-point spread in the previous report.
Five-year, Treasury-indexed, adjustable-rate mortgages averaged 3.28 percent, 4 BPS worse than in Freddie previous survey.
A seven-basis-point increase from the previous week left the one-year Treasury-indexed ARM averaging 2.71 percent. The one year averaged 2.61 percent in the week ended Sept. 6, 2012.
The one-year Treasury yield closed at 0.16 percent Thursday, according to Department of the Treasury data. Seven days earlier, the one year yielded 0.14 percent.
Bankrate.com reported the six-month London Interbank Offered Rate at 0.39 percent Wednesday, unchanged from the previous week.
ARM share fell to 9.9 percent in the Mortgage Market Index report for the week ended Aug. 29 from 10.7 percent a week earlier.
