Although fixed mortgage rates moved higher this week, indications are that they could tumble in the next report. A widely used adjustable-rate product was lower this week.
As forecasted last week by Mortgage Daily, the average 30-year fixed rates rose 5 basis points from a week earlier to 4.28 percent in Freddie Mac’s Primary Mortgage Market Survey for the week ended Thursday.
Historical data from Freddie indicate that in the same week last year, 30-year mortgages rates averaged 3.37 percent.
Freddie Mac Chief Economist Frank Nothaft noted that fixed rates crept higher in the week leading up to the federal budget deadline.
A look at this week’s Treasury market activity suggests that mortgage rates could come in around 10 BPS lower in Freddie’s next survey.
At 2.61 percent, Thursday’s closing 10-year Treasury note yield was around 10 BPS lower than the 2.71 percent average during the days that Freddie surveyed lenders for this week’s report.
But more than two-thirds of panelists surveyed by Bankrate.com for the week Oct. 16 to Oct. 23 saw it differently — predicting that rates will rise at least 3 BPS. Just 22 percent forecasted an decrease, and only 11 percent saw no changes ahead.
The U.S. Mortgage Market Index report from LoanSifter and Mortgage Daily for the week ended Oct. 11 indicated that jumbo mortgages were priced 31 BPS higher than their conforming counterparts. The jumbo-conforming spread was unchanged from one week prior.
This week’s 15-year fixed-rate mortgages averaged 3.33 percent, just 2 BPS higher than in Freddie’s previous report. Fifteen-year loans were more attractive this week as the spread between shorter- and longer-term rates widened to 95 BPS from the prior week’s 92 BPS.
A 2-basis-point rise from the week ended Oct. 17 left five-year, Treasury-indexed, hybrid, adjustable-rate mortgages averaging 3.07 percent in Freddie’s latest report.
Freddie said that one-year Treasury-indexed ARMs averaged 2.63 percent, a basis point better than last week. One-year ARMs averaged 2.60 percent in the week ended Oct. 18, 2013.
One-year ARMs adjust based on changes in the one-year Treasury note yield, which fell to 0.13 percent Thursday from 0.14 percent one week earlier, according to Treasury Department data.
A less-used ARM index, the six-month London Interbank Offered Rate, slipped to 0.36 percent Wednesday from 0.37 percent seven days prior, Bankrate.com reported.
ARM share in the most recent Mortgage Market Index report moved up to 10.3 percent from the previous week’s 9.8 percent.
